3 bed, 1 bath house for $23,000, but...

[Michael Wentzel]

I'm looking at picking up a single-family house in southern Colorado for $23,000. It is actually owned by Medicaid and we're dealing with an attorney in the negotiations. I'm estimating $5000-$10,000 in rehab.

It should rent for about $650 per month, cash flowing around $200 after expenses and PITI.

The catch is possible foundation issues. Front door leans a little, cracks in the stucco, floors a little slanted and cracks in the plaster in one bedroom. But the place was built in 1900. My optimistic mind says that house is solid and isn't going anywhere after 113 years. My pessimistic mind says I could sink my entire rehab budget into foundation repairs.

The attorney wrote up the counter proposal in such a way that the property is sold "AS IS" (which is common) and that we waive our right to terminate the contract after inspection (not common).

I keep going back and forth between grabbing it at a great price and making it work or walking away and looking for the next deal.

Any thoughts?

Mike