Should I overpay for a property I can't resell but gets 13% ROI?

[Blue Presley]

I wanted to get some advice on the following opportunity.

I have an opportunity to purchase a condo in a good location and whose complex overall has had a historical vacancy rate of about 5%.

Single family homes in my area are making a small comeback, and over the past few years the area has seen 7% avg annual appreciation rate for residential homes.

Condos in this area, this one too, are the exact opposite. The units in this building were selling for $50k 3 years ago, and 3 units just this year have gone for $28k. Not updated, these condos are renting for $600 per month; updated, around $700 per month.

The unit I am considering I've negotiated down to $32k; I'll paint and replace the carpet, but other than that the unit is in great shape (although I do foresee replacing the HVAC unique within the next few years).

In the title I mentioned "a property that I can't resell." This will be my first condo, and I've learned a lot. In particular banks have policies that don't lend on condos if the renter to owner ratio exceeds 20% to 25%. This is particularly true of my bank, and my banker suggested that this had a lot to do with the falling prices - banks won't lend against them so owners (landlords) are having to sell to other investors at prices that are easier for another investor to pay cash for. Whether or not this is all true, I don't know so feel free to comment if you have experience with that. But, when I do sell, I estimate getting what has been market for these - $30k ish - and that's if prices don't continue to fall.

In any case, here are the numbers:

$36,000 - Purchase price plus make ready repairs

$4744 - Annual NOI (with 5% vacancy calculated)

$4744 / $36000 = 13.17%

I am calculating that I get 0 appreciation benefit from owning this property. Another con is I'm about to tie up $36,000 that would be hard to liquidate (compared to SFDH in the area) But a 13% ROI is a heck of a lot better than the money sitting in my bank account.

Thoughts?

Thanks!