Refi cash out to buy new property

[Bobby Lee]

I'm looking at a cash-out refi to use some equity to purchase another property. How should my calculations change though?

I run the cap rate calculations and found a $500k SFH with a good cap rate at 20% down. Let's say it's an even 6% cap rate. But in reality that down payment is part of the cash out refi, so if I apportion my refinanced mortgage payment to this new property, my cap rate falls to 2.5% and I'd be cash flowing just making a few thousand dollars in a year while net income would be in the tens of thousands still.

Should I be calculating differently, since nothing is coming out of pocket for me - as this would essentially be a 100% financed property?