Purchase of Neighbors House Off-Market

[Scott Egbert]

Our neighbor told us they plan to sell their house and we are interested in purchasing it. We would either keep it as a cash-flowing rental property or fix it up and move in to it and rent our house. We would even consider flipping it if the money is right. We know the upkeep has not been good and they told us they had someone look at the inside and quoted them around $30K. It does have a new roof.
Zillo shows it at $474 K and they mentioned asking $420. 
The problem is that we do not have the money for a downpayment and couldn't pay the note without rental payments.
Zillo shows our home at $390K, meaning we have about $238K in equity. We currently have a 3.5% rate on a 20 year loan that matures in late 2039. 
Is it foolery to even consider these things?