Another thing to watch out for besides properly handling homestead: Many states have a cap on yearly increases, and that holds only for each owner.

A cap rate is merely a reflection of the underlying risk of the asset and the market. 

Whether you’re determining market rental rates or extracting a cap rate.

Thats really where cashflow lies in multi family investing. buying A class usually is more of an appreciation play. the lower down the class of neighborhood that you go, the more positive cash flow it has. this is also similar to a cap rate which can help you to judge an area.

However, we have bought all our houses in appreciating areas and since there isn’t a cap on increasing tax assessments on non-homestead properties, tax hikes can easily outpace rents and what the market will bear. 

I want a cap rate that is 3 percentage points above my cost of money. 

I am very excited about this venture, but I really want to be the "Robin" to a Caped Crusader.

However, I feel confident that if we had to pay the mortgage off, I could afford to pay $30K.The exit strategy is to stabilize these properties for a year or so at the current CAP rate of 20% (using an overall expense ratio of 50%) and then sell them to other investors for a CAP rate of 10% which would put the value of this property at $116K which doubles our purchase price.

Sorry, I was just using a cap rate relevant in my area.

I have no idea if that is a correct CAP rate nor do I yet fully understand how a CAP rate is even calculated.