What you're missing is entitlements
I.E. permission to build.
- From the government you'll need building permits, and they will have a bunch of requirements - conditions they'll put on your building permit, such as replace the plumbing lateral, install all AFCI breakers, etc.
- You are also in an HOA district, and the HOA will have a bunch of community requirements e.g. change exterior paint color.
- You're only buying one unit, and you share a roof and structural wall with the adjacent unit. And that means anything you do that would affect the other unit must be approved and done professionally. I call that an entitlement cost because hiring the professional is the cost of getting permission to do the work.
And we're in a depressed town where $50,000 is as good as you can hope for. If it were San Francisco and you could foreseeably get $1.3 million, different deal.
The low price is probably due to a glut of housing compared to the number of people who want it, i.e. the town population is shrinking as a rule.
Entitlement costs, plus actual cost of renovation, probably exceed what the building could possibly sell for, given the glut of usable sub-$60,000 units right in the same complex. Hence no one has fixed it. Adam Smith wants the unit to be demolished.
Also, HOA and city taxes may be oppressive
Here's the other problem you get when demand is low and housing stock is in bad shape. The costs of the infrastructure are even higher because it tends to be old and urban (e.g. public transit to run), but there are fewer taxpayers and less assessable value to spread it across. So...
- City taxes will tend to be VERY high. Far higher than you'd expect.
- HOA fees will also be very high, because they have higher-than-ever site costs against lower-than-ever occupancy.
So these costs will "eat you to death" all the while the above economics is not working out.
Fair chance the city itself is the seller of this property; the usual fate is people stop paying the prohibitive taxes and HOA fees and just walk away; then the HOA puts a lien on the property whilst the city takes it for back taxes.
Oh, yeah. There might be liens.
Normally, a bunch of "due diligence" happens, usually orchestrated by your Realtor. The problem is that on a $5000 house, no Realtor will represent your interests for 5% of $5000 ($150).
That leaves you to pay for those costs a la carte, and the very strong temptation would be to simply skip them, to avoid paying 30% of the property's cost in research*.
That could end in disaster if something like a lien is missed.
* Hold my beer. Once I bought an old industrial site for $120,000. Legal and the stage 2 environmental site assessment was nearly $40,000.