With the new flood insurance act that just went in place Oct 1, the news is full of horrible flood insurance premium stories, so nice to hear a positive one!

Please take note that for the next 2-4 years the only thing you will get is $2500- the 20% on the back is only when the house sells in 2-4 years at which time it will probably need to be renovated again and you have no idea if he will sell in 2-4 years.I think you have better luck finding a rental getting a mortgage and renting it out, having a run of tenants then eventually selling the house- At least then you will get the monthly cash flow till you sell instead of $2500 upfront and future money in 2-4 years assuming he doesn't ruin your credit during that time.Sorry that I sound so horrible maybe I need coffee.

From a cash flow point of view, it's horrible.

Another house had zero interior pictures on the MLS - it was horribly outdated, and the new owner has put in at least $100,000 in upgrades so it, too was underpriced.

She said the house was in horrible shape the last few years she had been renting it and that the landlords were no help and didn't care to fix the issues anymore - mold on the downstairs walls, leaky roof, and constant sewer backups into the downstairs.

That's horrible for those areas to be in at 1% of rents.I did look on FMLS and for DeKalb the recent closed sale it might look like you have a shot of getting out with just paying  a little cash.I would get a local residential broker to do 2 CMA's one for each property and include resale costs to see what would be needed to get out.Residential investors that like these houses would say to stay in.

When I purchased the property it looked horrible and still had the owners property inside even though it had been abandoned.

Thus far, every time I run the numbers I come up with what are seemingly horrible cash flows.  

It's pretty easy to weed those types of properties out.Also, to say "collect the appreciation and not have to worry about collecting rent to stay afloat" just sounds like horrible advice. 

I am horrible human being that believes all we have in life is our word.