This morning I got an email from another agent letting me know about a deal he listed. The numbers he emailed me are as follows:
Asking price: $74,900
Cash Flow $718.70/month
Cap Rate: 11.5%
The problem with this break down is there is nothing factoring in a vacancy rate, repairs, capital expenses and property management.
Once you factor those items into the breakdown this property is a 7% cap rate not 11.5% cap rate.
Make sure when investing in rental properties you hire an agent who knows investing.