Seller Finance Deal, Low cash flow, but $0 down

[Reade Milner]

My wife and I are considering buying my mother-in-law's house in a seller-financing deal to use as a rental property investment.

Here are the details:

- Purchase price: $150K  

- Interest rate: 4%

- Mortgage: $668

- Expected expenses (not incl. mortgage): $885

     - ins: $150

     - vacancy: $150

     - taxes: $135

     - repairs: $150

     - capEx: $150

- Expected rent (based on comparable rental properties in the area): $1500 (potentially $1600 with extra $100/mo for storage unit in back yard)

- Expected monthly cash flow: $98-$198/mo

I'd imagine there would need to be some minor improvements that would need to be made to the property before renting (paint, drywall here and there, etc). To be conservative, I'd say $3K. It's about a 40% cash-on-cash, if I'm calculating correctly (doing back of the napkin math), which is great, but could easily swing drastically lower if I missed something.

For me, this amount of cash flow doesn't seem worth the risk. Is there something I'm overlooking or overestimating that could either completely bust this deal or make it more attractive?

What considerations am I missing?