First Buy (potential) for a Lurking Newbie!

[Phil S.]

Our realtor for our personal home buying/selling has learned of my interest to get into properties and has kept on the lookout for potential properties within my appetite. Here is one he just sent to me 24 hours ago, and I wanted to know more than anything should I find out more, jump on it, or run!

Basic Info:

Home is 2,800 square foot duplex in the city I am located in. Area is not "bad," but is below average on crime-desirability scale. Home is listed at $40k, which is what is prompting me to look deeper. Our realtor was contacted by their party, and the story is the owner was living upstairs and was collecting rent from the tenants living below. Downstairs tenants have been there a decade with no plans to leave, and their rent would cover the mortgage. The children who just inherited the place after the owners death have no desire to become landlords, and as most live farther away out of town, just want to unload the place (it was at 50k when it was listed on June 1st, and after 6 weeks dropped to 40k).

Currently, I think I want to do the following:

1) Schedule a walk through to assess condition

2) Price out cost to renovate upstairs. I was told the owner lived there for years and really didn't update anything. BUT the renovation upstairs could be paid by the additional rent I would receive for renting out the upstairs

3) Verify what rights / obligations I would have with the existing tenants downstairs

4) Verify funding. How much would I actually need to have either in cash or to be approved for a loan that would essentially only be 40k total? 

My wife and I just bought our own house in the fall, so while we aren't broke we are still a little low on funds due to the down-payment we put down. Would the other party want cash only? Should I try to finance this with a home equity loan on my current home? Could I do a traditional mortgage for the property?

Thanks for the help! I am just worried about seeing another possible deal AND the chance to get started pass through my fingers because I am too worried to actually do something and step forward!