I'm generally finding about 5.5% gross returns on rent, all said and done, maybe I'll cash flow $200-300 per door with 30% down, but on a $600K plus property, the cash on cash return is pretty dismal. 

He's grossing over $40k/month, and his goal is to net at least $1k/unit. 

Hi @Josh Gross, Welcome to the BP community!

I tried to include all the pertinent information below:Rental Income: $13,200Rent: Currently has a tenant on one side at $550 per month without a lease – I’ve made it a condition of the sale that the tenant has either signed a new lease with my property management company or delivers that side vacant; other side is not rented out due to required rent ready repairs; rental comps in the area show between $550-600 (I’m being conservative and assuming $550).Expenses:Vacancy: 10% ($1,320)Property Management: 10% of gross rents ($1,188)Property Taxes: $2,065 ($905 for City of Memphis, $1,160 for Shelby County)Property Insurance: $450 per year Repairs and Maintenance Assumption: 2% of Property Value per year ($980 per year)Utilities: separately metered; all paid by tenant except for lawn mowing at $25 once a month for $300Advertising: 6% (roughly ½ of first month’s rent) $792 per yearDebt Service: Based on $49k purchase + repair price, 20% ($9.8k) down, 5% 30 year fixed is $2,525 per yearLocation:This is probably where most of my concern is coming from: Western edge of Hickory Hill, Memphis, 38115; major cross streets: just SW of Clarke Rd and Winchester RdAcquisition:Purchase Price: $42k, seller to pay closing costsRepairs: $7.5kTotal Acquisition Cost: $49.5kARV: Large range of comps in the area, best guess is $60kFinancial Metrics:Net Operating Income: $6,105Cap Rate: 12.33%Cash Flow: $3,580 per year, $298.33 per month, $149.17 per unit per monthCash-on-Cash Return: 36.5%Do you think it's a good deal?

At such prices, it is possible to find investments with with month rent at 1% of the property price (that's 12% gross yield).Investing for rental income is easier than for gain, as one just needs to find a property with an affordable rent, in an area with a healthy job market to be able rent it, there is no need to find a property below market price as in the capital gain business model.At $900-$1400 per month, most tenants rent by choice as they could save to buy a better house.

They are fully rented (month to month) and gross ~$64000, with $17,000-$20,000 in annual expenses, before loan payments and management fees. 

I've doubled my gross since March.

Figured I could get a gross rental income of at least 1200.No utilities are separated.

To determine the cap rate 1) Calculate the yearly gross income which in your case is $68,520.00 check the books make sure rent roll shows the rents are as stated.2) Subtract the operating Expenses not to include mortgage and interest =$28,936.803) Net Income = $68,520-28,936.80 = $39,583.204) Cap rate = Net Income divided by purchase price $39,583.20/400,000= 9.8958%Investors usually will use cap rates to compare properties in a neighborhood.

Currently the gross property rent is 2300 (460 avg/unit).