Bank Owned Suggestions?

[TIM N]

Hey there I have to option to pick up a bank owned property for what I feel is a good price. Here are the specs..

3 bed, 1.1 Bath two story townhouse with a full basement. I figure the property needs about $10-15k worth of upgrades. The bank is asking $55k for the property. The property sold in 2006 for $128k and currently there are three comps on the market all for around $120k.

My questions are:

1) For those with experience, is it unheard of to give the bank a low ball offer of say $40k? The property has been on the market for 90 or so days, so I figure they're wanting to move it out of their inventory.

2) Would it be better to turn around and try to sell for $120k or better off finding a renter and holding onto the property.

Any other suggestions or pointers that would help me in this process would be GREATLY appreciated!

Thanks!