Well... here's my opinion.
I would buy the rental with cash.
But, you didn't say where the cash came from. Is the cash you have from savings? Or from somewhere else? That could change things... Do you already own a place you are living in? If not, then do you have rent? (the evil of building net worth) or some other situation. If you don't already have a home, I would say buy this even more, since if things don't work out down the road, you have a fall back, free and clear place to live. Or you can keep it rented and prolong survival until things come around.
I have 2 rentals in your price range... value 65k and 150k rents are 700 and 1050. I don't find it expensive to keep them up at all. They have hovered around (+/- $200) $1000 a year in taxes/insurance and $1000 a year in repairs.
First thing, are you willing/have the time, to do the minor (and major) repairs yourself? This saves a TON of money, and hassle, in my experience. Really techie stuff like A/C work... I hire out. I find that there isn't much to do, a random repair (faucet/toilet/electrical/etc) but a fair amount of work (3 days, sometimes more) when preparing to rerent.
Houses are not that complicated. Even major stuff can be done. I re plumed a whole house, pressure side from the curb in, for $800 in parts (60ft underground run, indoor piping, fixtures, sinks, toilet etc) plumbers all quoted over 2k for the same job. I just re roofed one of the houses. The estimates came in at $8k+. All said and done, $3,550 which was $200 more than what the insurance covered me (front of the house was damaged in a wind storm, back was OK, but in need or replacement) So if I had paid to have it done, I was looking at 4k negative... and dropping from 10k on the year to 6k... instead I got over there on the weekend and ripped the old roof off and got the felt laid. Then spent the next weekend roofing the patio (I did my own torch down roofing) next was the shingles, which I did hire a helper to muscle them up the ladder, $150 for 2 days help... I could go on. But I hope I got my point across. Depending on your outlook, most anything can be done, and it isn't that expensive. (Some things do just suck, new A/C system for example, no real way to save money there)
Second, you aren't likely getting any return on your cash. And if you don't already own a home, everyone should be so lucky to start with a house free and clear. Always have a place to fall back to.
Not sure there is much else to add... If I think of something... I will post.
Thought of something, if the house is valued at 120k then your family member will have claim the difference, 40k as a gift to you... Using the yearly cap plus his lifetimes cap, or have to pay gift taxes.