What scenarios justify Cash on Cash of less than 6% to 8%?

[John Hanson]

Hi all, I've been looking diligently for rental property, typically duplexes, triplexes and quadplexes, but with today's prices, even if I were to buy these properties at a 10% discount to asking price, I'm coming up with Cash on Cash estimates of no more than 3% to 4% in the area just outside Minneapolis/St. Paul metro area.  I'm using the following expense estimates:  Vacancy factor 8%, overall ratio of expenses to income of approx. 50%, Cap Ex Reserve of 1%.

Everything I've read says that one should have Cash on Cash of at least 8% to justify the investment.  Are there scenarios that I'm missing that in fact do justify investing for Cash on Cash of 3% to 5%?  I'm a first-time investor and would like to get started, but wondering if I just need to wait until prices come down...which could be a long time.

Thoughts?