Deal or not?

[Dan Simpson]

Looking for some good feedback on this potential deal.

A SFH 3/2/2 in an excellent part of town. Very few rental houses or houses selling on terms available in this area. Great schools, near shopping, attractive neighborhood, etc

They are asking $125k, I can probably get it for $120k (won't go lower for now, new listing), it needs updating - new bathrooms (6-7k), interior paint (2k), carpeting in at least one room, the HVAC needs to be inspected (older furnace) which could be more expenses. FMV of this house is $150k.

I can buy with 15% down, 4.5% interest amortized at 25 yrs. taxes are $110 a month, insurance about another $90. Total PITI = $775 a month.

My exit plan is to sell on a L/O @ $150k. Get a minimum of $10k down and charge $1,250 a month rent which the market supports. I'd have to sink at least $10k worth of work in addition to the $18,000 down payment but I'd get the 10k back on the option consideration.

I'd profit on the spread between the rent payments ($1,250) and my PITI ($775) plus the difference in purchase price ($120k) and the selling price ($150k). The L/O length would be 2 to 3 years. If I put 10k into the house the profit would actually be closer to $20k.

Good deal or no? I want to emphasize that the house is aesthetically attractive and it's in a sought after neighborhood. Many houses in this area sell for well over $150k.

Thanks in advance!