Is an 8% cap rate good?

Yes. An 8% cap rate is high by national standards and produces enough net operating income to carry a 30-year loan with 20 to 25% down and still cash flow. On a $500,000 property it is $40,000 of NOI, about $5,190 in monthly rent under typical expenses.

Eight percent is common in lower-cost Midwest and Southern markets, older stock and small multifamily. It roughly matches the annual cost of a 30-year loan at 7.25%, so leverage is close to neutral and the property carries itself.

Check what produced it. An 8% cap rate on honest expenses, with vacancy, management and reserves included, is a good deal in most markets. An 8% cap rate on a seller's pro forma that omitted those lines is usually a 6% property. A high cap rate is also the market's price for something: turnover, repairs or slow appreciation.