I have to really force myself to think rationally and slow myself down at times. 

The cap rate doesn't usually reflect the rate of attainable yearly price growth in the value of the rental property which often explains why a rational investor may often invest in some lower cap rentals.

You're rationalizing to convince yourself this deal works.

If this is not true, however, he may be coming from a perfectly rational place in that a misstep or two could put you in serious financial peril. 

My question would be when is it ever rational?

Anytime I've invested time & money trying to go after old money I end up wasting my resources.I rationalize the losses that occur in my business by knowing I'm using my time & money wisely going after new opportunities with profits that exceed the losses in question.This attitude allows me to sleep at night even though sometimes I am walking away from money.

Unique combinations of family, employment, dreams, lifestyle, weather, and matters of the heart—just to name a few—often dictate where you live, and they’re often tied to emotions.But what if you could keep your decision-making in the strictly rational realms?

Also, I read in different forums that LOC (specifically HELOC) will take a hit on the credit due to debt to credit ration.

Taking a step back, there's also the question of the percentage of the consumer loan market vs the percentage of the corporate loan market; e.g. it would probably make more sense for banks to pass the lower rates to businesses (bigger loans, more "rational" decisions, comparatively higher transparency, more collateral, etc) rather than individual consumers.Would love to hear what other BP'ers think; either way what happens in Japan in the following months will be an interesting one to watch...

Don't listen to people who rationalize poor cash flow in their markets.