Calculating Cap Rate for Direct Real Estate Investment

XYZ Real Estate Holdings is considering a direct investment in a portfolio of single-family residential properties in a growing metropolitan area. The management team conducted a thorough analysis of the local market, examining supply and demand factors, historical price trends, and current rental yields. The projected cash flow from operations is expected to provide a gross rental yield of 8% annually. However, they must also consider transaction costs related to property acquisition, property management fees, maintenance costs, and potential vacancies.

Given these factors, the team is evaluating different metrics to assess the attractiveness of the investment. Specifically, they are focused on the capitalization rate (cap rate), which is defined as the ratio of net operating income (NOI) to the purchase price of the property. They aim to compare this cap rate with the expected cash-on-cash return.

If the acquisition costs for the properties are $3 million and the expected annual NOI is $240,000, what is the cap rate for this investment?