Buying in a soft Rental market - does this deal make sense?

[Josh Ewin]

I'm looking at my first deal and my broker is telling me the deal makes sense , even though it's cash flow negative... he says (and I agree, with some reservations) it makes sense from an appreciation standpoint.

It's a 1.5ba/2br condominium in South Florida. Nice area, nearby the Interstate, shopping, schools, 3 miles from the beach. There are 60 units in the building; the community has it's own pool and tennis courts. Probably $2000 in cosmetic repairs to be made. Current tenant's term ends in 30 days (has been there three years). Here are the numbers:

Asking Price: $130,000
Comps: Last 3 sales in the building have been $130,000 - $160,000
(My broker tells me the unit can be had for somewhere between $105k-$115k.)
Rent: $1000
HOA fees: $331
Down: 10%

The Monthly picture:
$1000 - Rent
($331) - HOA fees
($75) - management
($205) - tax
NET: $389

Now we add the mortgage in. Figuring 6.25% on 10% down (30yr fixed); the monthly payment is $637:

$1000 - Rent
($331) - HOA fees
($75) - management
($205) - tax
($637) - mtg
NET: ($248)

At the height of the market, other units in the building were going for $200,000. Others on the market in the building are asking $160,000-ish. Figure the unit could be sold in 3 years for $160,000 (this seems realistic, given the current state of affairs)... so we look 36 months down the line and see:

Sale price: $160,000
Total investment (expenses x 36 months and down pmt): ($20,068)
Loan balance: ($99,600)
NET: $40,332

So, the question is, if one could reasonably expect the unit to sell for this price, does it STILL make sense if you're in the red on a monthly basis? I'm all ears...