If ARV is 138, and it only needs cosmetic work, why is purchase price so low? 

This may really depend on your area and I have yet to test this out how well this will work in my market.Also check out this post from BP for other ideas- https://www.biggerpockets.com/renewsblog/2014/11/08/8-killer-resources-savvy-low-budget-wholesalers/ 

It might not be a scam - in CA there are very low rates on PM.My friend has a rental condo for $1850/mo and her PM fees are $76 flat.

The house that just sold that looks exactly like mine doesn't even have kitchen cabinets instead has shelves and I actually have cabinets and still find I'm getting low balled on the  appraisal.And to top it off there's a new home listing at the moment of another home in my neighborhood with the same layout of my house and is selling for 299,999 so why would mine appraised for way less??

Note that this is a low income rental in a C-class neighborhood that is beginning to gentrify but still has a few years before it attracts very well qualified tenants. 

I haven’t been looking for that long but I’ve mostly seen $350k and up, and anything on that low side is a serious fixer upper.

Giving very specific answers is often enough to satisfy out of state investors...truth be damned.What a low hurdle for a company to get over!  

@Matthew John I’ll add that detroit metro/Michigan is a tough market for good tenants, prices are still low enough that most people with good credit buy rather than rent.

I’ve been wondering about comps to use for the needing repair property and the remodeled one.I have made offer for two properties now and the cost for the recently sold properties in the neighborhood was too low as there maybe repairs needed but the leads I had was a remodeled one.How do we go about this?

The best thing to do in this case is to have your agent call their agent and see if they are open to a low offer.