I concede that we shouldn't be responsible for supporting the government in the same amount, and will illustrate supporting CA on a sliding scale.

How do you pinpoint areas from a distance, can you still find success in markets like the one I'm illustrating above?

There are many way sellers (or brokers) can manipulate cap rate, so it is important to understand how to value a property yourself and not rely completely what they are demonstrating.To keep it really general, the cap rate is simply an illustration of the expected "rate of return" that investors are currently expecting to receive if they paid cash for a property.

Im going to, for argument's sake, allow our 2br condo to be compared against 2br houses in terms of rental price, partially because it will still illustrate my point, and also, I did not feel like hunting through 1000 listings for apartment complex owned and managed studio-3br listings to find an example. 

Cash Flow Quadrant is another good book to read, by Robert Kiyosaki, and the illustrations provided there might give her a good basic understanding of the differences between the ways people earn money around the world.

So let's get to it...SUPPLY AND DEMAND LEVELSBelow we have two charts that illustrate the level of SF inventory in Dane County.

Let me illustrate - you can borrow 30 year money for under 3.5% right now or you can invest that equity and earn a multiple of that.Debt is a tool like a chain saw - yes, it can be dangerous, but if you know what you are doing and don't become careless it is much faster getting the job done.

She was only out of work for 2 weeks but refuses to pay the rents because she said she knows she doesn’t have to (we know, topic for another discussion, but it’s just to illustrate her character).

@Brian Burke has perfectly illustrated the difference between IRR and CAGR...since IRR assumes cash out to invest, then the timing of cash back distributed over time...without any consideration for the additional return which may be generated by the investment of the amounted received through periodic distributions.

Another simplified illustration, but a person in each state buys a $1,000,000 house.