Should I consider this, or am I wasting my time?

[Brian Lookabaugh]

I am currently looking at a house in an East Texas town of about 12 thousand with no real industry. It is only 80 miles south of Dallas so there are a lot of retirees from there. The house is in one of the more desirable neighborhoods, although it is an older neighborhood and seems to be going a little downhill. The neigborhood is strange because you can have a 160k house next to a 500k house. What I'm looking at is a house straight out of the 60's that has had no updating since then. Foundation issues. Needs a new roof. Total remodel. About 2800 sq ft. 3 beds, 4baths, 2 of which are in the master bedroom. Will have to do some reconfiguration to make things a little more modern. Tax appraisal is 203k. Asking price is 175K after a starting price of 220K. Been on the market for around a year. It does have a kick out or contingency contract. Im thinking of offering 135k cash as a backup. I just dont know how to calculate the rehab. And if I do buy and rehab, should I rent it out or flip it. In updated condition it should rent for 1800-2000 a month, but was told by my realtor that those prices are hard to get in a rental in this area. But she told me on a flip I could get 220k. Thanks for reading. Please help this newbie!