Cap rates do not apply to single families.

You’ll want to get a good understanding of the type, terms, and prepayment options associated with the loan as you do not want your operator to be forced to sell before they’ve been able to perform the complete business plan if it is not in the best interest of the investors.Some items you’ll want to acquaint yourself with are the difference between bridge and traditional loans, prepayment penalties or defeasance fees, interest only periods, rate caps, and refinance options available for the specific loan your operator is leveraging.

I am assuming they should have some kind of cap on them?

You can also learn how to calculate cap rates and cash on cash return to further evaluate a deal. 

If you can find something at a 6% cap rate (or more) I think it would be good to stay local and build up scale with your property manager.  

@Preston L'EcuyerSince this is the SF built in 81, you will definitely need to set aside more than $1200 per year for Cap Ex. 

However, the cap expense/maintenance costs in those low cost areas are not much less than in higher appreciation markets.  

Taxes do seem high but then again I live in CO where the taxes are crazy low compared to the rest of the US...Also, I don't know what the cap rates are going for a class C building in Ann Arbor but it appears they have this one listed at an 8 cap if the numbers you gave are their numbers...while you want to purchase at a 9.38 cap.

There are expenses your not accounting for like Cap ex, maintenance and repairs, vacancy, management....or maybe you are.

Even after cap gains, their money would make way more in the stock market....