Try out the "Property Analysis Tool" in the left column under "Interactive" here at Biggerpockets. It will help you play around with numbers so you can get a feel for how different assumptions affect your bottom line.
A couple of things jump right out at me when I look at what you posted.
(1) I would always factor in at least 5% if not 10% for vacancy (here they did a lot less, but sellers always try to convince you that vacancy is lower than it really is, and there's just a physical amount of time it takes to turn over a unit, even in a place that is easy to fill). So I would up that value to about twice what they listed.
(2) The expenses total must assume that you go are getting one of those great places that never needs repairs and requires no maintenance. These are great if you can find them, but unless you are buying in Fantasyland you better factor in about 10% for each. Some people here advocate a 50% rule (that is, assume all expenses total 50% of income). The theory is that you can never predict exactly what many of the expenses will be, and that 50% comes closer than any number you could come up with on your own. If you use the property analysis tool, though, you'll have to put in your own estimates.
(3) Even if you ignore 1 & 2 above and assume the listed values are correct, this deal would be terrible at a 3% cap rate. The cap rate is the return you would get if you made a cash purchase (i.e., it is the return not counting your financing expenses - in this case the net operating income divided by the purchase price). It can be a useful way to compare a real estate investment to a non-real estate investment. Think about what a 3% cap rate means. I'll assume you would need a loan to pay for this place. What interest rate will you be able to get, maybe 7%? That means you'd be borrowing money at 7% for a return of 3%. That's a quick way to go broke. Even if you paid cash, as your friend pointed out, you can do a lot better than 3%. Whenever I think about how to invest money, I don't compare to a money market, I compare to an S&P index fund, which will average 12% return with zero time or effort on my part, and relatively little risk over the long haul. With real estate, where I have to also invest time and effort, and potentially take on more risk (though that's debatable), I want to see a much better return.
But all this talk is nothing compared to how much you learn by playing with the property analysis tool. Try it out, make some assumptions, and see what you get for different types of properties. What you are looking for will partially depend upon your goals (immediate cash flow, long term asset build-up, some balance of the two, high maintenance for better returns vs. less work for less return, etc.).