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I believe what they are telling you is that you will have an 11.23% annual return on the purchase price. That is to say that the Net Operating Income (NOI) has been/will be $124,666 per year. NOI is the net income before non-operating/non-cash items such as interest on the mortgage and depreciation which is a non cash expense. 11.23 is a pretty low CAP rate very nice properties often go between 9.5 and 10.5. BTW that $124k is what you have left over to pay for the mortgage and significant capital expenditures. Maintenance and such should already be included in the calculation of NOI.

Chris
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