This might make it more of a buy.I tend to look at a property a little differently:  area economics, area growth, jobs, etc. 1stthen I look at the actual cost of the places and average rents for the area I want to buy.Again, my .02Good Luck

The idea is that you want to use the cash to grow the business faster.

There are plenty of examples where it would make sense to have higher cost of funds than current cap rate.Examples such as: Value add property with low current cap rate, short term / mini perm financing with expectation of cap rate improvement over the duration of the financing, 'path of progress' real estate where rental growth rates can reasonably be assumed to increase 'x' percentage over the interim of the financing period, financing a development that will be repurposed, low leverage which offsets financing costs, etcIn addition to the reasons why CAP rate can be lower than financing costs, the math also works out that CAP Rate < Interest Rate can still be profitable.Example: Suppose you don't have the capital to pay cash for a $1,000,000 property.

The growth of the area was not well-thought-out so you have streets that are single-family ranches that suddenly change into attached homes and suddenly change into attached homes with rear service garages.  

A good property manager can be gold in and if you work for a good company as a property manager there's a lot of room for growth as well as just being involved and then setting yourself up for the opportunity to invest on your ownMy property managers all have had no prior experience and really are not all that great and are paid 40 a year in just salary and if they put in effort to actually try to go above and beyond they can easily make double that.

I can access property data for the past years through the MLS for Grand Rapids to show its growth.

---ROI AnalysisPURCHASE ECONOMICS: Opening bid = $137.5k + $500 escalators up to $145.5kClosing price = $145kDeposit = $1kLoan = 4.75% fixed conventional w/ 30 yr amortDown payment = 25% or $36,250Due at signing = $37,216 (incl lender fees, title fees, taxes & insurance impound, negotiated seller credits, pro-rated rent, et al)Current Rent = $1,425 (700 + 725)Market Rent = $1,800+ (900 + 900) → used for CoC analysis belowEXPENSE ASSUMPTIONS: $3k repairs (planned for Jan/Feb ‘18)5% vacancy7.5% CAPEX7.5% OPEX13% prop mgmt (incl placement fee)5% insurance (actual)11% property taxes (actual)YoY GROWTH ASSUMPTIONS: 2% expenses3% rental income3% property valueCoC RETURN ESTIMATE: Yr 1 = 9.5%Yr 3 = 11.5%Yr 10 = 20%NOTE: return estimates are based on the Bigger Pockets rental property calculator.

And neighborhoods are being upgraded to reflect that growth.

As far as good areas to invest in, if you go far south out by Slaughter and further east out towards Del Valle, there's a lot of room for growth.

El Paso is seeing a lot of economic growth, although I don't really know what's driving it.