@Mazin El-AchkarNIM is the reciprocal of the CAP rate, so a NIM of 15 would correspond to a CAP rate of 6.67.  

Measuring this property with a cap rate is a bad idea because when your ready to sell and ask lets say $400,000 and your only getting $36,000 a year.

@Ben Leybovich  the biggest issue I see using cap rate for SFR is most rental SFR's are sold with no history of performance so its all blue sky any way.. just like pro forma's on multi that are all based on best case scenarios to derive at a cap rate. a combination of actual sales comps and GRM is probably more appropriate in the SFR space..

If they are drastically lower, you could well end up with repairs or a Cap Ex down the road - that will send them in the other direction.

Selling on a cap analysis for 4 units they are getting 2.7% to 3% cap rate.Exchanging about 1 million or so from proceeds.

If they tell you it has a cap rate of 8% then you run the numbers put in your assumptions and then determine the price using their cap rate and your assumptions.  

(awesome resource so far)So background:This is the property https://www.redfin.com/CA/Los-Angeles/14647-Erwin-...Assumptions:Buyer is asking 675k (although in mid 2014 the lot in much better shape sold for 450k, but lets ignore that) I assumed i paid asking price.I assumed the stated rents are correct (they seem okay judging by CL ads)I put 25k down finance via FHA loanGuessed at insurance and PMI costs, as well as maintenance, landscapingAssuming only utility paid by me is water + landscaping + sewage/trashI got a cap rate similar to redfin which makes me think I did this correctly, but mine is lower mostly because I included CapEx & management costs in my expenses (assuming they did not)But just running these numbers, this looks like a horrible investment - so am I doing this right?

I expect a cap rate of more than 10% for any buy and hold properties.  

The problem with this is that if you get a thorough and complete survey by a capable LOCAL surveyor, you will see a note in the survey that only the parties certified have rights to it and that the survey is only to be used for that particular transaction.

My triplex that I was able to snag is running a cap rate of 15% (not normal, it took some work to find and close that deal) but is a hike from my house.My initial look in Milwaukee has been on the northern end, say 60 to 75 st areas.Right now I am thinking about dropping down that way in a few weeks to do some scouting and follow some leads.