Would you be reselling or is it a buy and hold? 

Or reselling.

@Charlie MacPherson being in the business of reselling though, finding someone to buy a 500k in a 350k neighborhood would be more of a challenge to sell.

I tried to resell it and when the title company ran the title I later found out that very same Land lot has a 31k lien of it from the demolition that was done during a teardown of the previous house.

(Cash Flow, Purchase price, Ability to Resell, etc.). 

If you want to cash-flow or resell you can't pay anywhere near that but at least there's a max ceiling.As for cap-rate expectations, I'll let the good folks who knows the exact area sort that out.  

How to properly do a due diligence on a property you want to purchase and resell?

By "flipping" I assume you mean you want to buy, rehab and resell single family homes as opposed to say, wholesaling them?

I had always been under the impression that IRS liens stayed with the property no matter what happened, that buying any property with the old owner's IRS lien meant the new buyer would have to pay the lien to take ownership or maybe just to resell the property.

or should we be looking at buying rental property or investment properites that we can purchase renovate resell on profit?