Help! Possible first flip or BRRRR - worth it?

[Michele G.]

I am a buy & hold investor. My husband & I have just started exploring the idea of doing a BRRR & something came up in a nearby town over on my auto email this morning. Is it over our head or a good deal?

3 bed/1bath 1600sf, big yard. I know the area well. It's a great town, great schools with a strong rental market because people want the schools, but can't afford to buy. My friend who lives there says people are constantly posting asking for homes to rent, but the inventory is so limited with long term tenants. From pics - complete remodel needed, some rooms gutted to studs & sub floor. All fixtures, cabinets gone. There may be a hole in the roof (picture shows a dark spot on roof). I'll drive by later to see it. This would be a complete rebuild from the subfloor/studs up. Zillow says built in 1860. That's not unusual for the area. Is that a problem? My friend says it was a HUD house that's been vacant for awhile. What is a HUD house? I've heard the term, but never cared enough to look into what it was. Is that an issue?

Asking price is $115k. My agent is working on comps now. Last month a 2bed/1bath 740sf sold for 162k in great condition, but not new or top of the line granite counters, etc  We own a local plumbing company so we know plenty of contractors in the area. A 3/1 for 1600sf sounds like a lot of wasted space. Should we consider adding a bathroom and possibly a 4th bedroom if the area could support a 4/2 configuration especially if it’s stripped to the studs?

How do I begin to estimate the cost to rebuild to determine if this is worth considering? What red flags should I look for? Am I crazy or does this look like a good deal?

I’m nervous, but really excited about taking on a project like this.