Low cap rates on buildings. How to make it work?

[Mike A.]

I've been searching around the Yonkers/New Rochelle and Stamford/Greenwich area and the cap rates are incredibly low; almost not even there. I am seeing 1% - 3% cap rates in these four cities. What gives? How does one make money? I was looking at buildings between 1.2m - 2.5m and these cap rates are pulling in roughly 1000 - 1200 per month per building. This also assumes an agency loan hovering around 4%. It hardly seems worth it. Is the market too hot in these areas to buy anything?