Cap Rate and Cash-on-Cash ROI versus $100/door
Hi BP Members,
I hope you're well. I'm analyzing a property for purchase and the cap rate is 5.73% and cash on cash ROI is 5.07%. The monthly cash flow is $291.46 total for the duplex. While I think the rent could be increased $75 or so per side in the future, one of the units is in a 2 year lease. Purchase price would be $295,000 and would be putting 20% down, as I couldn't find any options for less down with an investment property. Note, this includes 10% for property management as well. The numbers would be nicer if I self-managed, but don't live local to the area.
What are your thoughts regarding the lower cap rate and cash on cash ROI versus yielding >$100/door, which this is currently doing? Most other information I've read indicates not buying for less than a cap rate of 7% and hopefully cash on cash of at least 10-12%.
Thank you for your thoughts!
*This link comes directly from our calculators, based on information input by the member who posted.