Why do people invest in 6.5 to 7% cap rates?

[Account Closed]

I live in midwest ohio which is supposed to have some of the highest cap rates in the country and I am consistently seeing low B grade multifamily properties selling for 7 percent cap rates, is the competition really this fierce?

At 7 percent there is  no cash flow, for example (correct me if I'm wrong)

5,000,000 purchase price, 20% down, 4 percent 15 years fixed.

350,000 noi (7 percent)

So financing comes out to roughly 360,000$ a year!!! so this example has negative cash flow when you have to pay tax on the equity (after interest and depreciation) you're building (correct?) 

Basically my question is why are people doing this?