First rental property - Should I buy or Pass

[Gavin Daniel Reynolds]

So I am looking to purchase a house that my parents currently own. A short background on the house is it is an 80's built mobile home which has had add ons added to the front and back. Currently 3 bed 2 baths. House currently has long term tenants of approximately 7 years. 

Today we visited the house with the appraiser to do a walkthrough. When entering the house you immediately get bombarded with dogs and the smell of urine. The house in complete disarray and it what I believe unsalvageable. The cost to repair this place would be way more than what I would be willing to pay. 

By running the number I would be cash flowing approximately $200 a month in cash flow with a 10-year commercial loan 5yr balloon of about $22,000. 

My thoughts after doing the walkthrough were, do I keep it the way it is and let my principle owed be paid down by the current renters, and at a later date of maybe 1-3 years tear the house down and build a duplex or possible a triplex. 

Current rent is around 600-750 for nicer places.

Thanks