People want multifamily - Cap Rates compress.

At just above 4%, the CAP rate is super low (at a CAP rate of 4%, I rather hold real estate in NYC than in Montreal).

Taking into account vacancy, cap ex, maintenance etc. you will have no cash flow and that property will cost you money rather than make you money which is never a good thing. 

If rental income is $2100 and the monthly payment is $1700 that only leaves $400/mo to account for vacancy, maintenance, cap ex, property management (even if you don't plan to use, should always account for this) etc.  

What’s the prevailing Cap Rate?

I am usually using 4-7% on cap expenditures and repairs and maintenance, each.

I have heard a lot regarding Bay Area housing prices reaching its cap soon, and I’m thinking the same to be honest.

One thing is, myself included, owners charge below market rent particularly if the property is paid off, tenants are there a long time and rents haven't been raised, or property taxes are lower than what they should be because of property tax caps and go up dramatically when it changes hands.It behooves you to know what the market rents should be, the market value independently of the sellers records.

I'd rather have the dry powder earning 2% in a money market acct ready for an opportunity than cap my ROI at 4.5%. 

REITs1) act like a mutual fund so liquid2) ordinary income so taxed at your tax rate3) returns are unpredictable4) intangible assetReal Estate1) less liquid (you'd want to hold for at least a year or more)2) returns can be projected based on the Actuals used as an input3) long term hold offers you sometimes losses in the first few years via depreciation deduction and then long term cap gains taxed at a max of 20%4) actual asset