First post and need some advice! (Texas)

[Mohammad Budhwani]

Greetings,

Ive been lurking for a while but this is my first time posting. Been researching for a while and finally stumbled upon a deal I feel is worth going after. I would, however, appreciate any input/advice from other members before I pull the trigger on this property. I work nearby the property and know the owners who are quite old and spoke to me about getting rid of the property. 

Property Info

Single Family Home (class B)

3 Bed, 1 Bath

1704 sqft home

7500 sqft lot

The owners agree to let it go for $55,000 but I estimate $20-30,000 of work is need to get the property to "sellable condition". According to other homes in the area its worth between $90-110,000 For now tenants have been living there for years paying rent of 700 per month. Rent there ranges from 700-900 (Zillow estimates 1250 for rent in that area). Taxes would be approximately 1765 a year. 

Am I making a mistake going after this deal?

Should I pay cash to finance the property?

Would this be a better buy and hold (rental) property or a better flip?

Thanks in advance.

[Steven Loveless]

I'm currently looking around for my first deal - so take with a grain of salt...

Can you realistically continue to rent for $700 without the additional $20k-30k or work? If so it looks like a decent deal - I make very (maybe too) conservative cost estimates, and it looks like you should cash flow ~$200-300 a month with no financing. Even with 20% down it looks like you should cash flow relatively safely.

If you can put the additional $20k in and get to that $1200 rent it would be an awesome deal - not sure if that is realistic from your $700-900 range estimate.

For a flip - if you are on the low side of your numbers at all it might be tight:

$55k + $30k rehab --> $90k sale leaves you only $5k margin

Your high side has ~$35k of margin, which seems pretty good?