Found more repairs than expected during inspection - Fresno, CA

[Justin Yurong]

I am currently near the end of escrow for a triplex in Fresno, CA (Oleander Ave and Trinity St). The plan is to fix it up, live in one of the units, and rent out the other two. Through inspections, I found that it needs much more repairs than I had originally expected. 

Current Purchase Price: $188,000

Total Expected Monthly Rent: $2,100

It is a 1925 triplex that needs (to name a few):

- Foundation work (post and pier, $11k worth of work)

- Roof replacement ($11k worth of work)

- Electric that needs to be brought up to code (still has knob and tube wiring, etc.)

- Termite treatment

- 1 dysfunctional water heater

According to contractor bids, there is at least $45k worth of repairs. I have a $20k budget for repairs. My lender would allow me to use an FHA 203k loan, instead of the normal FHA loan I originally planned on using. I still can renegotiate with the seller, as my offer is contingent on the inspection and appraisal.

Does anyone have advice that could help me decide whether I should go through with this deal, or back out of the deal and wait for something that needs less repairs? Any feedback is helpful.