How Could Great Cashflow be a Bad Deal?

I wanted to ask a question to everyone that I asked to Laura to get as much wisdom as possible.

I have a meeting Sunday with a real estate agent/investor that I know who is going to tell me about some investment properties that he has in some popular sections in Newark where everyone is trying to get in. The only thing I'm cautious about is that I think he's going to try and charge me Fair Market Value for these properties since him and his partners have already done the rehab work. I told him I want a killer deal. He told me because of the rental market in this area the property will cashflow at least $700 per month and I verified it to make sure, but is it wise to be in a property for Fair Market Value even if it does have a positive cashflow like this?

I will be using an FHA loan and he said he can get it done with no money down. What do you guys think about this and what should I be aware of going in? Some of these properties are in a great section of Newark near all of the new stuff that they are building. But I want to be wise. Thanks in advance everyone.