Single family home with severe cigarette damage, great price

[David Robert]

I recently became aware of a very cheap property (roughly half of after repair value) and upon looking at it in person I found out why it was so cheap: there is severe cigarette damage throughout the 1st floor (basement less so, but not entirely without damage); there is visible dripping tar on every wall and the smell is awful. I am considering buying the property in cash then hiring Servpro to fix the cigarette damage. After that, I'd paint and put a new kitchen in (likely do these myself, which I have done before). I have arranged for Servpro to take a look at the property in person to give me a quote for this job. Based on what my real estate agent thinks that this quote will be, roughly, and the after repair value, it looks like I could buy this property in cash, spend a month or two fixing the damage, and then put a mortgage for roughly 1.6x what I paid for it and thus have a cash flowing property at a few hundred dollars per month and a little more money in my bank account ready for a down payment on the next deal. There's currently a tenant in the house (who I presume caused the smoke damage), but the seller promises that this tenant will be gone before closing. I would refuse to close if this turned out to not be the case. This house is in a neighborhood that will not significantly appreciate according to my real estate agent.

When I think about this, I don't see many downsides, so it seems a little too good to be true. So, I'd like to discuss it — am I missing some downsides here? Does this sound like a good deal? 

[Jake Baker]

@David Robert

Severe nicotine damage can require extensive cleaning, sealing, and even replacing drywall or HVAC ductwork. Get a firm quote before committing.

If appreciation is low, ensure rents are strong enough to justify the effort. Market Appreciation is the least predictable, but historically, where you will make the most money. So I prefer to have more of that in the deal.