Found a small, rented cash-flowing property. What would you do?

[Russell Holmes]

 I have found what could possibly be a great starter investment house, or possibly not.    I, of course, would want to see it in person, have it inspected, etc and do my due diligence before moving further. 

 On the surface the numbers look good, though.  I'm curious what you more experienced investors would think...

It isn't in a stellar neighborhood, but it isn't quite the hood either. Looking at Google street view it appears that all houses nearby are similar in size and age, and from my personal experience of the area, it is a lower-middle working class neighborhood. Some houses are sort of run down, but others are obviously proud owner-occupants with fresh paint and nice landscaping. The view across the street is of a public elementary/middle school PE field, and the immediate neighbor to one side is extremely well maintained, the other side is decent. Down the road a few blocks further from the schools there are some rough looking houses here and there, but it doesn't look like a neighborhood you'd get randomly shot in or anything (maybe if you really tried to piss someone off), just that some owners may be too low income to properly maintain. I've looked up crime reports in the area as well. I'm sure like most lower income neighborhoods, there are a scattering of property crimes and such reported over the past 6 months. There's one condo type complex a few blocks away with 4-5 assaults reported within the last 6 months....but without looking into it further they could even all stem from the same rowdy person. The other crimes are either criminal mischief or theft. But they are spaced out in location and time, so it doesn't appear to be a crime-ridden hood per se. I may not choose to live there personally, having kids and being used to a suburban HOA neighborhood and nicer house myself, but in my kidless and poorer days I likely wouldn't have minded at all, and I wouldn't be intimidated in the least to manage the property and tenants myself.

The house is a 2/1, 804sqft built in 1948.  Wood framed on a crawl space. Smaller than what I would like ideally, but it is rented through 12/31/2017 for $900/mo and listed for $67,500 which includes "$32,000 in repairs" which include a newer metal roof, new flooring, new zone AC (the type with a compressor outside and a single wall-mounted evaporator/blower inside.  Not quite central air, but better than window units.  With that small of sqft it is probably more than adequate).  

The house doesn't appear to have been fully "renovated" but looks solid and in good repair inside and out. Two of the larger items, metal roof and AC, are both newish (no exact year replaced given in listing) and would likely have plenty of life left. The lot is about 5000sqft and has mature trees but not much else other than leaves and dirt. No HOA and property tax last year was $553 (not homesteaded, owned by an investment company currently). Most of the nicer homes I've looked at would be nearly impossible to get to the 2% monthly rent to value. Many around here are closer to or less than 1% ($175k houses that could rent for maybe $1600, etc). So although this one isn't being sold at far below it's value, the rent/value ratio is quite a bit better than many $100-125k houses I've seen.

From numbers I have run, it appears as if a 90% loan at full asking price and 7% interest would come out to about $515/mo with taxes and insurance.  On such a small house, putting away $350-$400/mo for a year or two would easily cover most anything that may pop up (again, thanks to the metal roof and new AC).   Both the Redfin and Zillow estimates of value are about in line with asking price, so I would of course want to get it at a discount. Recent sales in the area of similar homes go from the low 30's for full gut job foreclosures to closer to $100k on slightly larger move in ready homes.  Zillow predicts a 12% increase in value over the next year. Although I know I can't count on that to make the deal work, and am not planning to buy with appreciation as a driving force, the entire area has been appreciating over the last 5 years or so.  Many of the new homes being built nearby would be far out of reach of the people living in the immediate area, so I would imagine these smaller houses would stand to gain some good appreciation in coming years as the surrounding area improves.  

I also know that buying smaller crappier houses is more of a cashflow move than an appreciation move, but I want to get into investment and will likely need to start near low end of the market to make it feasible.

So if it is currently rented at nearly double what the mortgage would be, the current tenants appear to be keeping it in good repair based on pictures, and it may have decent appreciation over the coming years, should the bit of crime/rough homes be a deterrent for a first time investor? 

I have heard it is hard to get traditional financing on something this cheap, so would it be reasonable to assume that if I could come up with 10% down and manage the property myself that I may be able to find an investment partner to finance the other 90%?  Even if that 90% loan were on a 7-8% 30yr term and if I additionally agreed on a cashflow and profit at sale split down the road say 5 years, I could still stand to make enough to get into a nicer/more expensive rental next.

Does this send up red flags to anyone as something that would be wasting my time? Or am I right to dig in a little deeper to this deal? I'd love to get into a duplex or larger SFH, but this is the first one I've found that numbers come anywhere near working.

Any insight or things to look for would be much appreciated!