Working on first deal. We offered $20,000 over asking price. Help

[Kyle Neville]

My wife and I currently own a town home that is 1400 square feet. It is in a great area and our mortgage on it is about $760 a month. We could easily rent it out for $1300 a month and collect cash flow. So my wife and I just found a home that we want to turn into a duplex. It is 1800 square feet and in a quiet neighborhood. It was recently renovated and is really pretty. It already has its own entrance into the basement and has an area for the laundry, kitchenette and bathroom. We just need to instal all of it. The asking price for this duplex is $259,000. They already have an offer on the house for over market value. Our realtor suggested that if we want the house that we offer $280,000 because everyone is buying for about $15,000 -$20,000 over market. The problem is, my wife and I don't have enough savings to have a down payment. So, what we are doing is we are getting an equity line of credit on our current town home that we own. By doing this we will have enough of a down payment. If we do this, we could rent out the other half of the new duplex we are buying for another $1100 easy. So, in my eyes the numbers work. But Im new at this and I am guessing I am missing something. 

Are we making a  mistake?

[Joe Villeneuve]

Your could be fatal mistake would be buying the property because you want the "property".  Home owners buy properties, investors buy "deals".  Base your offer on what would make this a "deal", not what would get you the property.  If all the other offers are 10-15% over AP, then let them be fools...don't follow them.

...amd don't rationalize anything that makes this a deal.  Either it is, or it isn't...and it sounds like it isn't.