prices of rental properties have dropped alot more than rents (in fact rents have generally stabilized and even risen of late), which is the perfect equation for income properties. I am a real estate broker with a focus on real estate as an investment and own 3 investment properties for my own account in ponte vedra.
Cap rates of 6 - 8% are obtainable on solid income properties. Because income properties carry depreciation expense the after-tax returns are even more interesting compared to after-tax returns on alternative investments.
When I refer to cap rates I am not factoring in future price appreciation, just the net annual income as a % of the basis of the property (purchase price + closing costs + improvements). This is a solid return in the current investment marketplace and eventually when prices improve there is the additional capital appreciation that can add handsomely to the overall return.