Based upon my valuation with the basic assumptions that you provided (165K, 15% down, 1.7K in rents) along with very conservative future revenue and expense assumptions, along with a five year sell scenario, I can get an IRR of 11-12% which includes a passive activity loss yearly and positive cash flow, but, I can’t seem to get the capitalization rate north of 8% without really knowing the area that you are considering and the condition of the property. Most investors require a higher capitalization rate, but if you manage the rents properly and keep your expenses in check (including managing the property yourself if you are able), you can get that capitalization rate closer to 9%. Good luck.
