First property - new to the game

[Jenna Thomas]

Hi everyone,

My neighbor whom I've known since I was 7 years old recently went into assisted living and Medicaid will be kicking in.  She has offered to sell me her property for $50,000.  The current market value is right around $125k (roughly) for this house and it hasn't been updated at all since 1989.  It does however, have a new roof within the last 10 years, new AC within the last 5 years.  I am aware of a small foundation problem that will need to be corrected.  She has overall maintained the house fairly well.

The house was last assessed in 2014 and came in right around $102k (tax office appraised it higher but my family help fight for a lower assessment).  With the Medicaid aspect, we'll need to get an inspection/appraisal to get creative to drive the price down low enough, but I think it can be done.

With a bit of remodeling and repairs, I think it would raise the value to around $140k as that is what the other houses in the neighborhood are selling for or more.  However, this is the smallest 3b2b on the street.

Assuming I do purchase the home for $50,000, add around $25,000 in renovations and sell for $140k I'd stand to make $65,000 (best laid plans, right...)

Here is my background: 

I am a single mom, I have a full time job and I do not own my own home.  I am currently renting a house from my parents.  I understand that I can be creative with financing, but that's not really what concerns me.  I have always wanted to go into real estate but never thought I'd have the means to do until now as this golden nugget has fallen into my lap.  I would love for this to eventually become my career so I can step away from 9 to 5.  However, I know absolutely nothing about real estate investing but I am doing my homework.

My question:

Should I hold on to the property as a rental or flip it? 

If I were to flip it, I could use part of the profit for a down payment on my own personal home and reinvest the rest into another flip or rental.  If I kept it as a rental, it would pay for the mortgage, plus my rent and a few hundred dollars extra month profit.

Thanks in advance for any recommendations and helpful suggestions!

[Jenna Thomas]

Thank you @Ingrid J. and @Mark Nolan

Just waiting on the appraisal to come in.  I had a chance to take a good look at the property.  Everything seems to be in great shape, minus the foundation problem.  A few minor cosmetic changes and I think I've got a great rental.

Seller is paying for the appraisal.  This is a private sale, so only one agent.  Seller is paying closing costs/commission.

The neighborhood is an established neighborhood.  Lots of families with small children moving in.  I checked the rental value and expect $1150 to $1250 a month for this place.

Mortgage (including tax/insurance) $588/mo

Repair/Vacancy 15% = $188/mo

Cash Flow: $474/mo

Fairly sweet deal!  I'm eye balling my next property!