Hypothetically speaking with $500,000 of available capital...

[Nathan A.]

Hypothetically speaking of course, if someone has $500,000 in liquid funds, could it be invested to make $200,000 residually?

Math:

Property price: $2,000,000

25% down: $500,000

Debt service of $1,500,000 at 6.25% with a 25 year term: about $120,000 annually

Cap rate 16%: $320,000

Cash flow: $200,000

I understand that finding a property at a 16% cap rate is a little ridiculous - but I know they are available. Also, I'm not factoring in closing costs, inspections, etc.

That being said what am I missing?

[Jay Hinrichs]

another 30% or more of cap ex reserves  tax's insurance  repairs vacancy etc etc.