Deal or No Deal? Overpriced w/Little cash flow. Sought after area

[Account Closed]

This is a first purchase and I am looking at an off-market 2 home lot. A 4/2 & a 2/1 not attached. Together they rent for 3300 and after doing my calculations all said and done I would ‘cash flow’ around $100/month. The purchase price would be $515k. The same seller owns another 4/2.5 and 3/2 on the adjoining lot that I would have first right of refusal on when he decides to sell it in the next year or two. My biggest hold up is that I know I am overpaying. If I was to pass and it were to go to market he would definitely get more than $515 for it as I live in a college town with little-to-no inventory and everything this last year has sold for way over asking. Although many people with millions of dollars would likely overpay for this property it doesn’t make it a good buy for me correct? Or am I missing something? Given its spring is there going to be a big uptick in inventory and then I’d be kicking myself? 

What does everyone think?

Thank you much!

[Michael Garofalo]

@Account Closed if this seller could list it on the MLS for top dollar, then why would he be willing to give it to you at a discount? There is likely some form of motivation if he's willing to let it go for less than market value. Deferred maintenance, pending evictions or issues with existing tenants is likely at play (or a combination of both), or is he just desperate to unload these to roll money into something else via 1031 exchange? Or, does he not want to deal with real estate commissions/agents?

I'd probably do more due diligence to find out why he is interested in selling, and specifically why he would be willing to give it to you for less than it's fair market value. If you say you know you are overpaying, then why even pull the trigger and buy this? 

A wise investor once told me that there is ALWAYS another deal to be had. The people who get emotionally attached to a specific property and rush to buy something because of FOMO or anything else will likely get knocked out of this game quickly. It's easier said than done when it's your first property--I was definitely eager to get my first deal, but I looked at a ton of inventory, and only made offers I knew made sense. Fast-forward 4 years later and i'm sure happy I listened to others in this community and friends/family who have been investing for decades because everything changed when Covid hit, and if i had overpaid and was over-leveraged, it would not have been good.