Cap Rate and Cash-on-Cash ROI versus $100/door

[Josh Corriveau]

Hi BP Members,

I hope you're well. I'm analyzing a property for purchase and the cap rate is 5.73% and cash on cash ROI is 5.07%. The monthly cash flow is $291.46 total for the duplex. While I think the rent could be increased $75 or so per side in the future, one of the units is in a 2 year lease. Purchase price would be $295,000 and would be putting 20% down, as I couldn't find any options for less down with an investment property. Note, this includes 10% for property management as well. The numbers would be nicer if I self-managed, but don't live local to the area.

What are your thoughts regarding the lower cap rate and cash on cash ROI versus yielding >$100/door, which this is currently doing? Most other information I've read indicates not buying for less than a cap rate of 7% and hopefully cash on cash of at least 10-12%.

Thank you for your thoughts!

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