[quote=SD Realtor]Cash flow has no boundaries, decent or otherwise. The pain threshold for management of properties, tenant quality personal and/or neighborhood safety varies for all of us. Cash flow calculations on paper rarely match reality as you move into more questionable areas unless you are intimately experienced in those neighborhoods.[/quote]
I have to agree that being an experienced landlord is really important. But your lede is really the key. A 7.5% cap rate is a 7.5% cap rate. If a property is in an area that has higher expenses then those expenses MUST be included in computing the cap rate. Cap rate is NOT based on 12 months of rent and no expenses other than property taxes, insurance and a water bill. Higher turnover means higher vacancy, and lower cash flow. With minor exception, in SD there really is no such thing as a bad rental area. Only bad management and investors who overpay for property.
