Need help with a property analysis!

[David Augustyn]

I have been learning and following biggerpockets for some time now and I am getting ready to buy my first rental property but I need some help.

I have had the opportunity to look at a single family 3/2 before going to market and the seller is willing to do a land contract and is asking $58,000 for the house which is assessed for 49k. (lower values in my area)

At first glance it doesn't seem like a great deal, but he is willing to give a 5% interest rate. Also has a new roof and other Cap Ex stuff will likely be awhile. Other factors are that he was renting the unit at $650 with about a 1% vacancy rate and already has had 2 applicants since this last vacancy where he decided to sell instead. Side note: I have good reason to trust his numbers. (he's a local trustworthy cop)

When running the numbers, even with 5% each vacancy, maintenance, and CapEx, I should pull $150 cash flow if I can purchase for 50k (He is motivated and I would maybe max out there)

Dilemmas I have:

1. Should I rent it out right away or fix it up for a couple months? 

I could probably get another $50-100 a month with a fix, but in this area, you can't push the rent too high. Also, it's hard in this area to reap assessment value rewards out of improvements. The city has been tough about that.

2. Would I be going against the principle of making the deal in the buy if I buy at 50k?

Even if I cash flow, I feel like when I get a conventional mortgage in 5 years or less I may not have substantial equity to play with.

3. It's not meeting the 2% rule, more like 1.3-1.4% depending on what I can rent it at.

I just don't think real estate investors in this area are making 2%, especially on a land contract with this low percentage rate. They get snatched up.

Any suggestions from anybody?