Buying Over Fair Market Value For Cash Flowing Rental?

[Bill Mitchell]

Out of curiosity, are there ever any situations where you would consider paying over the fair market ARV for a property if its cash flow / rent ready/ has a tenant placed?

For instance, a property has an ARV of 120k. The property is in great condition, good financing, will cash flow $400+ after debt service. And already has a tenant placed. Would you ever consider buying this property at 125 or even 130?

I ask because I have some colleagues that are doing it right now. Is this a common practice, becuase it seems mostly people buy at a percent discount (e.g. 70% rule).