Lots of For Sale signs...?

[Brian H.]

I am considering submitting an offer on a 3/2 brick ranch in what I consider one of the worst neighborhoods in an otherwise desirable area. It's a very blue collar neighborhood in a zip code that's primarily upper-middle class with good schools. But, there are a lot of FOR SALE signs and at least one FOR SALE OR RENT within a couple blocks from my target property. It has no garage and no basement, is sitting on an oddly shaped, but very large corner lot. It needs both interior and exterior cosmetic work and has a 23-year-old furnace. It's been sitting on the MLS for 320 days; they're asking $94500 and I was thinking about offering $78000. Preliminary projected numbers:

Purchase price: $80,000
Loan amount: $77,200
P&I: $325
Rent: $750
NOI: $4500
New furnace: ~ $5000
New paint: ~ $2000
Cash on cash: 6%

The repairs kill my initial return but this will be my primary residence for at least a year; am curious if this skews the investment potential in a way I'm not considering. Also I'm not sure how accurate my repair cost estimates are. I'm planning to buy and hold.

Do my numbers make sense? I think I'm being pretty conservative on the rents in this scenario by the way. Am curious how much value I could add by building a carport or even a single-car garage if I do the work myself.

Oh and the original point of the post...should I be leery of the numerous For Sale signs?