Maybe I'm going about this wrong and someone can help correct my thought process (I'm using the 50% rule to estimate expenses since the proforma data seems suspect).Here is one example that I have seen:Property X$2,200,000.00Down Payment$770,000.00Loan Amount$1,430,000.00Annual Loan-$86,947.20Units111bed3Rent/unit$1,015.00Market Rent$1,050.002bed8Rent/unit$1,279.00Market Rent$1,305.00Gross Income$167,684.00NOI (50% rule)$83,842.00Yearly Income-$3,105.20Cash on Cash-0.40%Actual Cap rate3.81%Almost every property in my local area looks pretty similar to this one with negative COC or COC of 1-2%.

In short, it is a 10.5 CAP, with 14.0 cash on cash return.

Any thoughts on the purchase as well would be appreciated.Operating expenses/yearIncome / yearTotalRental income$655,249$655,249Laudry income$36,000$36,000Parking income$18,000$18,000Effective income$709,249$709,249Property tax$92,523Property Insurance$14,565Water/sewer$30,000Gas$20,000Advertisment$1,100Office$5,100Professional fees$2,713Property managment fee$18,000Waste managementCityHydro$170,000Maintenance and repairs$36,968Snow removal$4,000Total394,969$394,969Net operating income$314,280Cap rate about a 6% cap

And as for personal investments and getting a "discount" from a future broker....looks like a lot of firms around here work with Caps and once you hit your Cap...then you get to keep either 95 or 100% of your commission (minus taxes of course)....so any personal investments we do simply speed up reaching your cap faster and I suppose that's worth something....Thanks! 

Who owned it several owners ago and what a few people between then and now paid.It'll cash flow but it'll be a 6-7 CAP.  

What you will likely save on is near-term cap-ex expenses.

It doesn't take too much wiggling when it comes to assumptions about vacancy, repairs, or cap-ex allocation to turn a 6% cap into a 10% cap.  

So, my intention is to continue to accrue the cashflow in case of a cap ex situation or a new purchase.I am just wondering what people do with the excess cashflow/reserves.

I am a SCREA and at times Multi-Family appraisals could be subjective due to market cap rates, rents etc.

@Marty Gold I would think you'd want to put more than $400/year aside for cap-ex but that's just me.