Unique Situation and Need Advice

[Matt Speer]

I'm looking to buy my first property and am looking at properties near college campuses, particularly ones that are expected to grow in enrollment. I looked at a property today in which the sellers are asking for approximately $85k. They realtor mentioned that they'd take $75k because no one will touch it because the neighbor had a serious fire and abandoned the home (and yes, it looks horrible).

This brings up a potential opportunity in my mind and wanted to see what everyone thinks. 

The damaged house needs about $50k to fix up but comps would assume it's renovation value at approx. $120k and the bank is asking for $50k (I assume I could get it for $35-40k cash).

Is it a crazy idea to buy both, and look to flip for a quick profit? My thought is that having both would raise the value of the $75k property to at least $85k and would profit at least $20k on the other property. 

Any advice at all from someone with experience would be amazing! 

Additional details: 

$85k home-- expected rental income between $1,000-$1,200 monthly with no repairs needed-- 3 bed 2 baths

Damaged property-- expected to bring $1,400-$1,600 rental income at full value-- 3 bed 2 baths 1,700 sq. ft. 

[Jean Bolger]

Damage from a serious fire can be very expensive to rehab. You'd have to completely demo anything that burned or had bad smoke damage and build it again from scratch. Minor smoke damage can be sealed so that the odor doesn't leak out later- but it's easy to miss something and end up with an odor problem later on. And it can be a huge puzzle to figure out where it's coming from (there was a long thread about this on BP a while back) Also- the financing you would need on these two properties would be hard to co-ordinate; one requires a construction loan, one doesn't...

Frankly, I would really suggest you do not do this as a first property. You're in Indy, it's not like there aren't plenty of properties with great cashflow potential. Why pick a project that's going to be a huge challenge and a potential heartbreaker? You could be out of the game before you really begin.