Should I back out of deal after inspection? Day 7 of 10 due diligence

[Geremy Rosenberg]

Hi Everyone, I am an OOS first time investor and got a SMF built in 1920 (2 units, 1bd/1ba and 3bd/2ba) under contract at 20K below purchase price (@190K) with both units currently rented ($850 and $1200).  I have had an inspector come out and he was able to see the basement and 1/1 unit.  The tenants in the 3/2 had COVID and did not let him in.  

With that context the inspection came back with a lot of issues.  To name a few HVAC for unit 1 is 20 years old and could not fully inspect the heat, the pipe to the sewer has completely dropped and is not connected, in basement the window header, subflooring and joists are damaged from termite activity, and their needs to be some tuckpointing and masonry work done for the exterior brick.  Using a contractor contact the rough estimate of work required is 20-25K.   My agent has asked the seller to take care of some of the work and she has agreed to the plumbing, so maybe 7500 of the additional work to be done.  

I am trying to determine now whether I back out of this deal or think about the long-term potential.  The pros of staying in are below on the appreciation

6.24%Appreciation - 6.00%YoY Rent Growth - 0.41%Population Growth Rate

This was taken from the new BP market finder tool.  Also the rents are below market with Unit 1 coming up end of Sep. so could go from 850 to 1100.  And Unit 2 up in April which could raise from 1200 to 1500, so another $550/mo. in income. The property has a new roof (2023), new HVAC for the larger unit (2023) and new HWH for one unit (2022), plus is in a really good location on 15th st. in Covington, very near downtown. The CMA shows properties like it valued at 210K.

The cons are I have not had a contractor in the property (plan on having that asap, multiple subs if needed and extending my inspection period), the inspector did not see unit 2 (3bd/2ba), but will come back and not charge to finish.  Also the work could end up costing me a lot more than 25K.  

I am having difficulty figuring out how to use the numbers here to see whether i cut my losses or proceed knowing some major capex work could be done after renovation, so hopefully no major expense in the near to medium term, and all the potential of the area in price growth and rental growth.  

Please provide any advice on how I could/should be thinking about this.  I am so excited to get my first place, but want to ensure it is the right move.  Thank you everyone for your help!