I'm 22 years old and just graduated college. I've been working for my employer for about a month, and have a unique opportunity in front of me at the moment.

I have the opportunity to purchase a small fixer upper home for an absolute steal. It is priced significantly under market value. Almost 40K under what the county values the house at AS IS.

In order to make the home liveable, the interior would have to be gutted down to the studs. I analyzed the numbers and estimate all the improvements to cost approximately 15K (90% of the labor would be done by myself and father). I've met with the realtor, walked through the home, and got my hands dirty in terms of looking the home over top to bottom, inside and out.

The opportunity to make money is there.

However, I see myself with three options:

1) Buy the home, leave it sit as is, and hold it for a few years. The market will rise over time. On the street the home is on, homes are valued 30K - 50K higher than the one I'm looking to purchase. I simply "buy low, sell high" when the market rebounds. I highly doubt the home will lose value. It's at rock bottom right now and will not go lower. In the mean time I will be paying a mortgage, insurance, and taxes, but the payment will be so low on a fixed rate, 15 year mortgage that it is not a financial burden whatsoever.

2) Buy the home, put 15K into it, and rent it out. I could charge anywhere from the range of $400 - $700 per month rent. The tenants would pay my mortgage and fill my pockets with a few hundred dollars per month. I could keep this property for life, while collecting rent. The home could be paid off very quickly using this option and once it's paid off, the rent income would be 100% profit.

3) Buy the home, put 15K into it, and sell it. Because other homes on the same street and surrounding area are valued at 30K - 50K higher, I should walk away with a nice profit. I would then have the funds from the profit to either invest or use as a down payment on a home for myself.

I would appreciate any input you have regarding the options I have. This would be my first true experience with real estate investing. All the knowledge I have learned so far have been through reading books, watching TV shows, and talking with a few mentors.

My mind is open and ready to learn from your input. I appreciate your time and help.

My first five properties were flips. I wanted cash in hand. Once I socked away a sizable sum I was more comfortable depending on a future income stream though rent.

Knowing what the purchase price is  would help me/us give you a better opinion. For instance I wouldn't want a $1500 mortgage to make a couple hundred a month. Or, I would spend 300k to make 15k. Too much risk.

I was a fan of setting up residual income first (buying rentals) and flipping later. Eventually liquidating my rentals for a down payment on an apartment complex.

How are the property taxes?

1.  Real estate deteriorates quickly when it is not lived in;

2.  This isn't reality, things break, need repair and improvements are a constant and tenants have a tendency to destroy property.  Rental income is not 100% profit, that's just not how it works.  A more realistic scenario is you rent it out $ 500 a month and get a $ 1000 deposit, a few months go along ok, then the water heater needs to be replaced, then the next month the sewer is stopped up because the tenant is flushing diapers and you have to call Rotorooter and that is $ 300, then the next month the kitchen sink is stopped up because the tenant dumps their bacon and hamburger grease into it, another plumbing job or bill, and the next month is something else and on and on and on.  Then the tenant skips out on you and you find out your carpeting is ruined, and a few walls too, and needs to be replaced, the sewer got stopped up again and instead of calling you, they disconnect it and its dumping into the crawl space, so the whole house smells like shit. You've also got three days of work to do hauling all of their trash and junk to the dump that they abandoned and end up $ 2000 in the hole getting it ready to rent again.  Welcome to the property rental business in the $ 4 - $ 700 price range;

3.  You could live in this one for a while and do the same thing later, if you lose your job will making this payment suddenly become a problem?

You're too young to be a landlord.  

You need to tuck away a little more life experience and get a bit more people experience before you let people move into a home that you own.

minus taxes, insurance, maintenance, lawn care, new appliances, etc

also, don't base your resell price on assessed values, find out what other houses are actually selling for

Be careful with that.  There may be a reason that it is priced low.  Does it have lead-based paint on the walls or asbestos insulation?  How about chinese drywall if it is newer?  You may have found a deal.  But you can also be up to your ass in alligators if the house contains any hazardous materials.

My house deal just fell through. My realtor speculated that the seller, a flipper, didn't know what kind of shape the house was in under the surface. He had pretty floors and closets put in and trusted his contractors to let him know if anything was the matter with the structure of the building. He speculated that the owner will be as shocked and dismayed as we were at how utterly unsound it is and how his money should have been spent on fixing important stuff, not gussying it up,