Really small apartment unit...really BIG cashflow!

[Kelton Johnson]

Hi all, I'm pretty close to purchasing a property in a nice part of Dallas. It's a small 1 bed 1 bath, only 500 sq. ft. and selling for $85k. The current owner has put almost $25k in upgrades into the small apartment making it an extremely luxurious 500 sq ft. It currently is leased for $1550 a month (fully furnished). It also has a low HOA fee of only $130 a month. Needless to say, when running the numbers with all of my expenses taken out, I'm getting a pretty outrageous cashflow of ~$700 a month with a 25% downpayment. My biggest concern is the fact that he other properties in this complex aren't rented for nearly as much since they sent as updated (or fully furnished). Second, I'm worried the appraised value will come back much lower than 85k since the price is undoubtedly inflated by the rental price. All that being said, the current wants to stay, and others have assured me I could rent it at or even above that price, if he were to leave. Let me know you guys thoughts on a deal like this, it's my first investment, so I don't wanna miss anything. Thanks,