Overpaying for a fourplex, but it still cashflows +12%

[Paul Lee]

I'm currently contemplating a counteroffer on an off-market fourplex that will be $50k (or 8%) over market prices for the area. The reason I'm even considering this counteroffer is (1) there is limited inventory in the area, (2) I have an opportunity to use an FHA loan, and (3) the property generates 12% cash-on-cash returns (not including a property management fee). I should also add that I am currently renting and plan on owner-occupying this fourplex.

If I were to hold this property long-term, do you think it would be wise to pursue this opportunity? Since this is an off-market deal, I can use an FHA loan and reduce my initial cash contribution; however, the appraisal gap may be significant. Curious to hear your thoughts BiggerPockets!