How much cash flow and cap rate is enough?

[David Hanson]

Need some advice. I'm looking at a 12 unit property that IMHO is overpriced because it breaks even ($0 cash flow) after all expenses and debt service (1.0 DSCR). Cap rate is 5.8% which doesn't seem too bad. I'm trying to figure out an offer/purchase price so my question is, how much cash flow is enough? The lower the price the better the cash flow so at what price and cash flow should I be happy and decide to do the deal? For example, to get to a 10 cap I would need to pay $410k less than asking which I doubt the seller would go for. Maybe an 8 cap is enough for me which would be about $270k below asking. Should I look at my cost of money and add some margin there to get to an acceptable cap rate? Or are those two numbers not relatable that directly? Whatever the number is, how do I justify that price/offer to the seller? I don't think sellers care about the 2% rule. Aside: also having trouble figuring out if there's a going/common cap rate for similar properties in my area. Is talking with commercial brokers the best way to determine that? I could also look at sold properties and what their cap rates are but there aren't many that similar. Thanks for any advice.