First Time Buyer, Advice Appreciated

[Alex Leendertsen]

Any advice you guys can give me on this deal would be greatly appreciated, even if it is "Not a chance in hell". Here it is:

A 3400 sq. ft duplex on a large lot for $185,000, which works out to be roughly $54/sq. ft. This kind of price/sq. ft is unheard of in my market. This is a very old property, originally built in 1947. Since then, there have been at least two additions. The basement has been converted into the second unit (most of it, some of it is actually still accessible to the top unit). This makes the top unit a 4 bed/2 bath and the bottom unit a 1 bed/.75 bath. The bottom is currently rented for $475 while the top is vacant. The top unit has been rented in the past for $1400, which I believe is very reasonable for my market. It should be easy to rent.

My plan is to move into the top unit while the bottom is rented out (I will be using an FHA loan). When the bottom's lease is up, I will move below. This allows me the sweet $1400 rent from up top which will more than cover my mortgage, and may even cash flow (although barely). I then hope to move on to my next investment property.

An inspection has yet to be performed, however I see no major improvements that must be made before it can be rented. The top unit has very nice hardwood floors throughout, the walls are in good condition (clean, at least), a high efficiency furnace has been installed, newer hot water tank, and the roof and exterior look fine. With that said, it is a very old house and I am nervous about the potential for future problems/improvements (e.g. the windows are all wood framed single pane, the house is surrounded by trees resulting a lot of moss and debris).

What are your guy's thoughts?