However, the prices are very mature, foreclosure inventory is very low, and investor competition remains very high.

Question though:When it comes to low-rent low-value properties, my experience has been that the maintenance and cap ex numbers end up being much higher because the cost of a furnace isn't that different from market to market.

You can order them online or pick one up in some Lowes stores.

Especially since they are performing first position notes with low LTV. 

.$1000 rent for a 85k home seems very low though.

Also, consider that you have 30-year financing locked at historically low rates, and the money you're using to pay down that loan might be better invested elsewhere.   

Yes, they drew me in with a very low APR and points, but the process to prepare for underwriting has been daunting to say the least. 

The offer sounds tempting since  the group has to finance about 3M$ (the rest comes from a bank with a low interest) and the building is bought about 1.5M below value, so when we sell we should expect a 50% return when selling which should be 3 years from now.The thing that bugs me is the way the building value was evaluated, i am copying a section from the presentation:"Market activity has shown similar properties consistently trading in the 4.75-5.25% cap range (refer to “Comparables” slide for specifics).

Sometimes though it is a response to a low interest rate enviorment, or higher demand. 

If you can get low enough rates to offset the loan origination fees and title work then go for it.