Buying a shoddy flip for a rental?

[Jussi Lundstedt]

Does anyone have experience with buying a poorly done flip to use as a rental property? There is a flipped SFH nearby that has been languishing on the market for a long time with the seller paying high interest on their hard money, and I recently saw it with an investor friend who has more expertise in construction and a GC license. We determined that the contractor the flipper used did a fairly bad job, but if the electrical and HVAC (done by different contractors) are ok, it would likely require a few thousand to fix some deferred maintenance and poor workmanship before being a decent, fairly modern and neutral rental townhome in an appreciating B/B- area. I plan on having an HVAC tech and electrician inspect these in addition to using a trusted home inspector before settling if we go under contract at a fairly aggressive price.

Financially, the deal looks alright for this hot market with about ~$180/mo in cash flow after accounting for PITI, vacancy (5% of rent), management (8% of rent), capex and maintenance ($100/mo each), and a $25k-$40k discount compared to comps with a better done flip job using equivalently nice materials/finishes.

That being said, we obviously don't know all of the horrors lurking behind the new drywall, bathrooms, etc. Is it ever worth buying a bad flip or are we just asking for trouble?