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Roberto could advise more precisely, but in general the plan sounds like a slow motion version of "Flip this House." A lot depends on what you think the future of the area will look like. In a rising market, buying old places and fixing them up can be an excellent business. People made fortunes doing that in NYC and other cities. In a falling market, the opposite occurs.

Another issue is the realization that quality tends to cost more, and doesn't necessarily sell for more, so there are trade-offs between financial return and pride in your work (quality of life). That might create some tensions or conflicts between you and your friend, especially since he is the one living there and facing the risk of complaints from disappointed buyers who would also be his neighbors.

Anyway, that's a long way of saying there are risks and opportunities. If you proceed, I hope it works out well.

Under one condition: you make your buddy a partner, splitting profits. Since his buy-in would be just his labor at first, his risk is small and yours is great. If he stands to win or lose based on the profit or loss from the house, he will be wry conscious of cost overruns. Say, 50% of his cut should go toward buyin into the business until he's as invested as you are. Roll over profits to avoid tax.

Thank you for your reasoned input!

I've done this, it requires very tight budgeting. Which means very, very close inspection so that you can budget almost all the work going in, there will be some surprises, but it can be kept to a minimum. The question is do you know the trades well enough to check if your fiends estimates are realistic. If not backstop yourself with a well respected independent inspector and lots of homework on costs of work. There is job estimator software all over the place so it's not hard to come up with some realistic numbers.

The other caveat is the word neighborhood. I lived in portland a couple times and the hood can change lot block by block. I would think salem would be similar. So do your comps carefully. You can really get burned on this. I know of area's of portland where the exact same house can lose 20% or more in a couple blocks. Parts of sandy blvd come to mind.

This all assumes you are going to be on site and actively involved. If not then it's a just gamble.

Also keep in mind that Salem is a smaller market and homes can sit longer than in large markets if you don't price them well. So temper your optimism on what you will get for a property.

Salem, ah, the town that exists basically because the state capital is there. Salem is a nice enough town, but aside from the capital and one college (small college) there isn't much else there. Some folks live there and commute north to the Portland area because it is/has the smaller town feel. There are some areas of Salem that are pretty run down. Demand (when I lived in Oregon) wasn't huge, but there is always a market for the right property, in the right location/neighborhood, at the right price. Could you make $10K, I'd say easily. I have a brother-in-law who did a similar thing in FL and CA. The biggest problem he had was the flip costing more than expected and the sale taking longer than expected. He/they ended up carrying the costs longer than anticipated - since he was the money and removed (he lived in UT and the houses were in CA or FL) it impacted him a LOT more than the brother on site, doing the work. If you truly have a cushion, can carry a float and don't mind a 3 month flip taking 9 months; with mostly you carrying those costs - go for it. You will probably hit a home run or two and will also probably have to sit on a property or two. Just remember, it's a pretty small market.