We know the area very well and we know that this area is desirable for many reasons, but it is on the comeback still from a depressed market. We definitely have done some research and due diligence, I just wasn't trying to give every single detail here but obviously I'm missing giving some background.
We bought with the intention of renting. One of the reasons we wanted to buy in this area is there are very few SFH rentals on the market, we have researched and rent would be at least $1100/month. That is for the 3bed/1.5 bath. There is also the separate apartment which would generate approximately $500/mo. I have owned a small 2bed/1bath house with a .75 acre lot and 900SF house for 20 years (being rented currently for the past 7 years) in the area that was appraised for $85,000 about 10 years ago, although the market has gone through some major shifts.
I'm not relying on zillow as the exact estimate, I was just trying to give an idea of what it said. The area is surrounded by homes that are 200-500k, but most in subdivisions. We have checked comparables and there is nothing that is apples to apples, but anything with this much land or this size house is much further out in the country or is smaller and there hasn't been anything like this size that has sold for anything less than 130-140k.
Another unique factor is there is a major life insurance company that relocated 10 years ago and built a division headquarters about 2 miles away (175 acre/323,000SF building), and they broke ground last fall on another building bringing a predicted 1,100 jobs to the headquarters, so we are assuming there will be a good amount of people relocating in the next year.
Our only hesitation in keeping as a rental is that there was more work than expected on getting the property fixed up. Initially, we were hoping to invest 5-8k but it is realistically more like 12-20k. That is they number that makes us nervous but even then I still think we make the 1% rule. Just nervous about all the headaches along the way in hiring contractors and if others had experiences like this that they could shed some light.
We did have a contractor friend walk through yesterday and he called it a "gold nugget", he said just the land in that particular area is worth $100k he would guess. So that did ease our minds a bit.
And finally, we are in a financially sound position, but I would never say we can afford to lose any money...can anybody? ;) Mostly, I was looking for advice from others that had purchased a property thinking they were going to rent and then decided to flip, if so, what aspects made that a more viable option.