Little fixer upper in C-/D+ neighborhood

[NA Loraine Nielsen]

Hello,

A friend has offered to sell his rental property, a 2 bed/1 bath on a double lot with attached 2-car garage for $40,000. It needs a new foundation so he's offered owner financing. I would definitely jump on this until l considered the neighborhood. Out of 5 neighborhoods in this town, 5 being the best, this one ranks about a 2. It isn't the absolute worst, but is right next to it. Most of the homes in the area are very old mobile homes. There are just a few small stick-built houses. Some properties are well kept and others have junker cars. Tenants in the area are possibly not ideal. Would someone want to buy it if we flipped it? I'm not sure. 

My initial decision was to simply pass on this, since we are in the midst of searching for a multifamily we can buy using an FHA loan, and don't want to complicate that process.

But then I started thinking about wholesaling, and wondered if there might be an opportunity for that. What do you think? Zillow says the value is $77,000. It's in Moses Lake, Washington. I would welcome any advice.

[NA Loraine Nielsen]

@Andrew Johnson Thanks so much, I wouldn't call it rambling at all. Very good points. As it turns out, we drove by the house earlier today and it was right out of a nightmare - cars in various stages of dismantlement all over the place, young people all over the place staring us down as we drove by, and just a general feeling of wanting to get out of there. Honestly, I've never seen a house and yard quiet that bad, it was one for the books. The Google pictures were about 5 years old and were obviously pre-current tenants! I told my husband I would want to take on that property if it was free. I feel so sad for the owner, but have to conclude he just didn't know what he was doing or he would have had these folks outta there long before now. 

Anyway, I appreciate the tips. I will use them as I continue to look for a deal.