I'm only looking at Cash on Cash - am I being stupid on this one?

[Stephen Loguidice]

I currently have a deal under contract for a buy and hold 2-fam in Island Park NY (for those of you unfamiliar it's in Nassau county Long Island)   House prices are high here so hitting something like Brandon's 2% rule is impossible - but rental prices are high and the demand is high if you have a decent apt. 

So I've only been doing the deal numbers looking at the CoCROI.  It's a $550k purchase and I can easily get $5k per month in gross rent (it's a 3/1.5 over a 4/2). Which with pretty conservative numbers nets me a 7.7% Cash on Cash (with 25% down) - it goes to 11.8%  for the first year when compounded with equity pay down.   And it's ultra turnkey, I only need to put a wash/dry upstairs and it's perfect.  It was hit bad by Superstorm Sandy so everything is new on the first level and the roof is only 2 years old. Plus the owners were the one who lived in the lower unit it so it's done up to the 9's - granite, hard wood, stainless steel, cable wired in the walls, high hats, etc.... I'll be able to get a renter in that unit the day I close on it.

But I I think I'm over paying for it by a good 5%-7% - there was a bit of a bidding war and I wound up going about $15k above list for it because the ROI kept working.

So I'd love opinions on if I'm being an idiot for only looking at the Cash on Cash and not caring about the purchase price.  In my mind it's a buy a hold and I'm not going to plan on selling it any time soon so I won't get hit with that loss - and I never buy for appreciate, only for cash flow.    Let me know your thoughts and if you think I'm not looking at something crucial in the equation.

-S