It was already perfectly set up for it with almost all water hook-ups in place already (wet bars, previous basement kitchens, etc.) and I mainly just had to remodel and put a few exterior doors in place to separate areas.

You have to be willing to get your hands dirty by either rehabbing, remodeling or restructuring (i.e. adding a room to a property with plenty of square footage to get higher rents) the property and then deciding if you want to play the LTR, MTR or STR game.Best wishes.

Personally I do house remodeling full time.

Should I just give her a price based the worst case scenario, a total gut job remodel, since we have to assume the worst if she doesn't want us to see it?

Purchase price: $118,000 Cash invested: $89,000 Sale price: $315,000Brought seller out of foreclosure and remodeled house from condemned to seller closing with property value increased by $196,000.00!

Since this isn’t a “fixer,” and you’re going the FHA route, you’d have to go out-of-pocket for the remodel/upgrades or get a construction loan based off the ARV, which is generally going to require 25-30% down unless you go with private money, which will have much higher interest.I see it’s pending, so maybe you got it under contract, but if not, I know you can find a good deal out there, even if it’s a smaller starting point.

One other negative that people don't think about is that even if the tenant is doing well, sometimes at the end of their lease they will try to squeeze you for more TI to remodel the place in exchange for a lease renewal. 

(They borrow your money to buy a property and tear it down to the studs to start a remodel and then run out of money or skill.)

My wife had already remodeled the kitchen, and after we got married, we spent some time to clean it up and do a full bathroom remodel. 

The property needed a full remodel including exterior repairs.