Where do you draw the line on cash flow with negative equity?

[Will Carter]

So I'm talking with an off market somewhat motivated seller (he wants to liquidate to fund one larger single project in cash, his own retirement community) about a 4 plex in a grade B- -ish neigborhood.

I'll keep the analysis short...

Comps say the property has an appraisal value of $125k at its best, largely due to neighborhood.  It's probably one of the newer (1985 build date)/best looking properties in several blocks.

Assuming I'm the property manager, which I plan to be in the foreseeable future, this property would cash flow me around $800-$900 per month if I could get it for $150k.  He's at $175k right now.

I also think I could turn that $900 cash flow into $1100 with a few easy changes pretty soon after acquiring the property. 

Even if I got it for $150k i'd be jumping in to $20k+ negative equity right off the bat.  

But...

At what point do you respect the cash flow enough to be ok with the negative equity?

My current 'strategy' (I've yet to implement...) wants cash flow and plans to hold this property long term.

Thanks