Borrow at 7.5%, earn at 5.5%?

[Alex Silang]

That's what the current situation is. Rates are at 7.5%, cap rates in my area 5.5%. 

Sure you get principal paydown but that's fairly low for the first ten years. 

Only thing that can make up for it is appreciation, but I have a hard time penciling in more than 3%. 

Seems the only good deals right now are:

a) value add
b) all cash or significant money down. 

Any thoughts?