After paying off the mortgage, the remaining money is sometimes referred to as net cash flow. This is not incorrect. However, many overlook the concept of cap rate that comes before it. There was an inquiry that confused these two concepts regarding a property in Augusta.

According to Zillow, the average home value in Augusta is $283,386 (Zillow, as of May 31, 2026). The same source states that the average rent is $1,646 per month.

The annual rental income is $19,752. The total return rate when divided by the purchase price is close to 7 percent. Augusta tends to have lower purchase prices in the main state, which results in this relatively high number.

The cap rate must account for operating expenses. Applying the 50 percent rule, the net operating income is $9,876. The cap rate when divided by the purchase price is around 3.5 percent. The mortgage principal and interest have not yet been introduced.

Cap rate calculations do not include mortgage principal and interest. This is because it is a measure of the property's profitability itself, regardless of whether there is a loan. Net cash flow is the number that comes after subtracting the mortgage principal and interest once more.

Recently, Augusta's tax rate changed due to a reassessment. The millage rate decreased from $24.40 per $1,000 to $17, but the assessed value increased significantly (News Center Main, as of 2026). The ratio is close to 1.7 percent, but the actual tax burden can vary by property after the assessment adjustment.

Looking at Kennebec County as a whole, property taxes average 1.12 percent of asset value, and the effective tax rate is around 1 percent (tax-rates.org, as of 2026). Since the millage rate in Augusta differs from the county average, it is necessary to verify with the property address.

A negative net cash flow does not necessarily mean a low cap rate. If the loan-to-value ratio is high or interest rates are high, the cap rate may be acceptable while the net cash flow could be negative. The opposite is also true. The two numbers answer different questions.

The rent in Augusta is 22.1 percent lower than the national average. Depending on the type of property, rents range widely from $850 to $5,500 per month, and the average rent has increased by $46 over the past year (Zillow, as of 2026). While the absolute level of rent is low, the purchase price is also low, so the cap rate remains a decent 3.5 percent as calculated earlier.

When considering Augusta, one might think the rent seems low compared to small cities in Korea. However, when viewed alongside the purchase price, the story changes, which is an aspect that can be easily overlooked when evaluating investments in this area. It should be approached in terms of ratios relative to the purchase price, not absolute amounts.

Just because the tax rate has decreased due to reassessment does not mean the actual tax burden has also decreased. Since the assessed value has increased significantly, there may be properties where the total tax amount actually increases even if the millage rate is lower. When calculating net operating income, it is important to check based on the reassessment rather than the previous tax bill.

Investors in lower-priced small towns often prefer to manage properties themselves rather than outsourcing management. However, choosing to manage directly saves 8 to 12 percent in management fees but requires time and effort in return, so it is advisable to consider this separately from the net operating income calculation.

Total returns are not completed by just cap rate or net cash flow alone. To fully assess the investment value of properties in small towns like Augusta, one must also consider capital gains, asset appreciation from loan principal repayment, and tax benefits from depreciation.

Cash-on-cash return is the net cash flow divided by the actual investment amount. The down payment and closing costs are considered the actual investment amount for this calculation. It is important to avoid confusing this with cap rate. In markets with lower purchase prices, simply reviewing these three indicators in order can provide a much clearer assessment of the property. This is not investment or legal advice, and it is recommended to consult with a professional before making any actual contracts.