Fortunately, it is going to be rental income which the IRS considers "passive", so it gets taxed at a different rate.

Particularly if you have roomates near where you work - you can lower your costs and be getting income on the SFH you own (tenants will also be paying down your mortgage each month with rent - so again putting money in your pocket). 

Bottom line, the tenants will pay off your brother's house and he will have a second income stream.

That's $3350 gross income on a $350k-$375k property.

I know that if I do purchase this property, I will be maxed out from a debt to income ratio. 

The renovation will cover the following:Kitchen - new floor, cabinets, appliances, paint, and remove a non-load bearing wall to open up the kitchen and living room.Living room - new floor and paint2 main bedrooms - new floor and paintMain bathroom - gut renovation, new floors, vanity, sink, showerBasement - convert portion of the basement into a 3rd bedroom with new sheetrock, paint, and flooring for finished part of basement and staircase, - wall off 2nd bathroom and gut renovatePurchase Price: $60,000Repair Cost: $30,000 (my own initial estimate came in around $25-30k so I am using 30k to be safer)ARV: $130,000Down Payment: $13,500 (15%)Hard Money Loan: $76,500 (85%)Monthly Expenses (6 Month, Interest Only Term):Interest: $825 (11%)Taxes: $220Insurance: $40Total Monthly Expenses: $1,085Total Expenses Over 6 Month Loan Term: $6,510Cash in the deal by the time of ReFi:Down Payment: $13,500Monthly Expenses for 6 Months: $6,510Purchase closing costs: $2,500Total Cash in Deal: $22,510Refinance:ReFi Loan: $97,500 (75% LTV)HML Payback: $76,500Closing Costs: $3,000"Profit" after ReFi: $18,000Equity after ReFi: $32,500Rental Income:Gross Income: $1,300/monthReFi Mortage Payment: $642/monthFixed Costs: $260/monthVariable Costs: $299/month (23%)Cashflow: $99/monthMy 2 exit strategies would be to simply flip the house, or, if the valuation comes in slightly lower than expected, I am confident I can still rent it at this price because it is a very rent heavy area compared to owning and continue with the BRRRR method with slightly better cashflow because of a slightly smaller ReFi loan amount. 

Real estate investing can be great, but there are risks and $150k won't get you a ton of incoming cashflow on its own buying rent ready rentals.

Side note: Luxury rentals on the most opposite side of the country on the Oregon Coast have not seen a drop off in income production due to greater barriers to entry of STR permits. 

I am an insurance agent, income tax preparer, landlord and President of the Illinois REIA. 

Your extra taxable income is $80-100k, not $40k.