Old Houses (1920's and 1950's) as Rentals

[Matt Wray]

In the market that I am looking into there are some neighborhoods that appear to cash flow really well. I would describe them as upper lower class areas. A lot of investors in town own rentals in these areas. However, the homes were built in mostly the 1920's in one area and the 1950's in another. I'm trying to sort out all of the issues that I've learned older homes can have. Lead paint, asbestos, outdated electrical and plumbing, sewer lines, old pier and beam foundation, on and on. My head is spinning! 

These neighborhoods will almost certainly have flat appreciation but could cash flow very well as rentals. Would it be worth it to do a major improvement like say update the plumbing on a 1920's house? I guess my question is what should I prioritize to have a stable rental property in decent condition without investing too much into repairs and upgrades in an area where the market will not reward them?

One example, there is a duplex available that I could get for about 40K. It has tenants in both sides and could generate 1000/mo gross rent. The house was built in the 1950's. It has a new roof, but nothing else has been upgraded. Those are attractive numbers, and I know a good property manager who could handle things on the tenant side, but I am concerned about getting hit with big Capex expenditures on a property that's not worth it.