Overpriced but cash flowing - opinions?

[Rob Cucugliello]

Hey All!

So I found a cash flowing duplex that I'm interested in purchasing as a BRRRR investment. Its a short sale and there's a minimum price they will let it go for, which is about $110k. The house needs between $50k and $70k to make it decent. (Could get away with about $40k doing the minimum). So all-in is at a minimum >$160k with all costs included. 

The problem is that the home would still only appraise for about $125k (give or take $10k), putting my equity way under the amount of cash I would leave in the house. Regardless, it would still somehow cash flow a good amount and CoC return would be close to 20% (depending on final repair costs & ARV/cash out allowance) bringing me $300-$500/mo.

Is the cash on cash return worth the 'loss' in equity? Every good deal is made in the purchase, which this would not be, but the monthly numbers and cash on cash return still seem to be worth it, especially for a long term hold.

Opinions?

[Aaron K.]

If it would only appraise for $125k that would imply that there are other similar properties in the area that could be acquired for $125k why would you overpay by $35k, because it cash flows?