Considering investing in a SFH FSBO on a Hill (Sort of)

[Tim Braun]

This is going to be hard to explain, I wish I had a picture, but I think I already know the answer. 

I am considering investing in a SFH 3/1 as a rental in a rural area. I work in the area currently, I have a pretty good idea on demand and am confident its there. My concern is more about the house itself. Its an older home, 100ish years old as a lot are in my area. It definitely needs some work on the inside and outside, but I think I can get it at a good price and do the repairs so that it makes sense. My plan would be to purchase, rehab, rent it out, then sell it.

My concern is its sort of on a hill... so the house is on flat land but one corner of the house is very close to a steep hill, as in you can see some of the foundation on the side of the hill. The hill is so steep to where you could almost walk on it. The house has also been there for 100+ years so maybe it has always been like that, or maybe its new - I'm not sure. My concern is that eventually it could erode enough to where its an issue - so I would be hesitant to hold it long term based on that. I think it could be fixed, but it wouldn't make sense for me to do it. MY initial strategy would be to buy as a deal, add value, then refinance and get my money back out of it but I'm worried the bank wouldn't refinance the house based on that.

There are a few other exit strategies, there is enough land there that I could buy, hold it, and put a mobile/manufactured home on the other end of the lot then knock down the current house once it reaches end of life. The area is rural, its not far from a nice lake area and wineries so there's a few possibilities in that avenue.

I'm just getting started in houses, I'm not looking to buy everything but I want to make sure I learn why I shouldn't buy, especially since I could get into this pretty cheap. Has anyone ran into this before? Anyone have any thoughts? My gut is telling me don't bother.