Sitting here with an RE friend of mine as I read this. She says her opinion is to slowly rehab the house in a 2-3 year period if you have the funds to hold onto to the property and rehab it. You will then get a premium for selling it in the up market (when it returns). You will have the opportunity to pull equity out and buy more property while renting it, or just sell it for a tidy profit. She prefers to rent and pull equity on a personal mark.
Alternatively, if you are strapped for cash, buy it and hold onto it as long as funds allow. Be very careful of cracked foundation issues. The city can come in and cause havoc, through permits and other regs. Hope this helps you weigh your opps JScott.