It's not clear from your picture what's going on there? 

If fixed up and made rent ready, could the local rental rates cover the mortgage payments? 

I have no idea what your plans are, but if you plan to use a real estate agent for the sale you will have about $8,000 in commission and $1,000 in closing costs, so you would be sitting at $116,000 to cover your investment.  

The property is a Short Sale.PP-$275KARV-$410K - $430K (most recent comp sold for $457K 2 weeks ago)Estimated Rehab Cost - 60K (unable to walk the property until the offer is accepted) Holding Cost - $1200 Per Month (6 month estimated hold)Buyers Closing Cost - 3%Seller Closing Cost - 3%Realtor Commission - 5%I am looking to get the loan from a private investor and will be looking for the loan to cover purchase, rehab and holding cost.  

He's a self-employed handyman and I am rather concerned he won't be able to make rent for long with no income.Maybe he can cover this month's rent, but I'm guessing he's about to be unemployed and crushed with medical bills.He knows he has a big rent hike coming, so we've briefly discussed an exit strategy (before he got sick).

The listed price was currently for $200K, but we still wanted to get 10% bellow that.Since I am a newbie, I had to run my numbers with everything known, and finally I spent half the day getting quotes from the various types of insiurence coverages for what I'd need to rehab it, rent half of it, and live in the other half all while fully covered.

The rental income falls about $200 short from covering my monthly mortgage payments.

The general picture is that I assume we are knocking on doors where the house is pending foreclosure?

This is a pain because you have to spend more time finding another tenant, but at least your costs are covered in the meantime.

If something happens, who covers the repair costs?