Hi everyone...this is my first post on this website. I'm 20 years old, totally unfamiliar with the world of real estate but eager to learn how it works. Right now I have about 20k and I'm making about 1800 a month. I'm looking to potentially buy a house with my best friend, a very savvy, enterprising kid who's 22. He just finished college. He took some class on real estate and got a license. He also studied economics, and he's extremely good with people and negotiation. I'm certain he'll find some way to get rich. He's also trustworthy and generous; we've know each other forever. Anyways, he's scrapped up about 150k in investment money, split between 50 of his and 100 of friends and family friends. We've been looking around at houses to potentially buy, fix up, live in, and sell (we're not sure for how long we'd live there or when we'd sell it, just whenever the time is right.) We found a 3 bedroom one bath for 500k. I contacted some agent, and he said there's a septic problem which he estimates will cost 37k to fix. I feel like this is probably sort of a low ball estimation. Anyways, the house looks pretty ideal from the pictures I saw, and at a phenomenal price, when compared to similar houses in a similar location. Most of the similarly-sized houses in that area are going for around 700k. The location is great; it's about 10 mins away from college campus and downtown. It's right next to a creek and a big park, and close to an elementary school. The school system in my city is great. It's an extremely expensive place to live because it's a desirable place to live. Housing prices in my city are outrageously high, which, as my father explained, is good and bad, as the housing market could continue to soar or it could crash...anyways, there's an overflow of students looking for housing, which the University can't handle. Thus there should be a reliable influx of students eager to rent out our house, should we decide to rent it out or move, in the future. In the meantime, we would be living there with a couple other friends (whose money makes up the 170k down payment we would have). 

So...it looks like a potentially very lucrative and worthwhile investment. Mortgage would cost around 2300 a month. We could easily come up with that. I would be paying a lot of the mortgage because I'm actually making the most per month, and eager to invest it in something lucrative. The other kids would contribute, and we would rent out rooms whenever someone has to leave for a while, and the long term plan is to rent it out/live on it for a few years or whenever is a good time to sell it, and then sell. I read online that a "fixer-upper" house is one of the best ways to make money in real estate. We would fix the septic system, and maybe install a new bathroom. It's worth noting that the house sits on a 10, 000 sq foot lot, so there's plenty of room to garden or potentially build more rooms for students, even a whole separate outhouse type thing, to rent out...

My questions to the community: why is the house going for so low? What's the catch? It was built in the 1930s... What should I watch out for? And what kind of stuff could go wrong? My dad, who is conservative in every aspect of his life, thinks I should invest iver the long term in mutual funds, but this is way more sexy and exciting, and I'd get to do it with my friends. He thinks of there is such a great deal, some experienced contractor would have pounced on it already. Also, do you guys have any other suggestions for how I could invest money? Any advice would be greatly appreciated. Thanks a lot.