@Judi Smith  you get what you pay for with almost all things in Life.there Is a reason HOOD properties are cheap.its simply the Risk over Reward component... the Risker the investment as a whole the cheaper it will be ( talking RE now)..

We didn't have that issue 15 months or so ago.We might have accepted mediocre cash flow numbers knowing we could improve those returns with a value add component and then assume a little price appreciation for a total return over the last few years. 

And don't forget about the other crucial component of any deal, and that's, financing!

@Jo-Ann Lapin I agree, fortunately @Dae’Leon Flucas was just over estimating the interest rate so he would not come in over budget on that component he wasn't familiar with.

Troy,I would add one thing to the discussion, there may be an insurance component to your decision.

I had a taxable account, which I eventually just blew out on the secondary market to get the money back because the hassle was too high.I do still invest in a Roth IRA (takes out the hassle of taxes makes the returns manageable) and utilize it as the "bond component" in my Roth since bond prices have been in the toilet lately.

I don't know the limit but you are getting a 3.5 loan so get a 4 plex or one that can be build out to 4+ or an ADU (value added component) so you can get some nice returns at exchange time. 

I am an authorized Goodman dealer and I would not sell a gas furnace (installed for the third quote)...this does not include the a/c unit, which is the expensive component in all this.Long story short, I would sell a furnace/compressor (entire system) 3.5 ton for closer to $10k installed...The $6500-7400 may be in alignment with your market...but, if the lowball price is legit, why not?...

However, the amount of the interest rate and inflation rate is a more important factor.In an inflationary cycle not all components of the economy rise by the same inflation rate.

All electric has been updated, plumbing updated, plaster walls have been replaced with drywall, has a metal roof, has 5ish yr old heating/air.I am not as familiar with structural components to a home, which makes me skeptical on such a old home.