Rehab Skeletons in the closet-buying from a previous landlord

[Jeff K.]

Hi fellow BP'ers. I thought I could get some thoughts and experiences.

I am looking at a foreclosure, unoccupied for at least a year or so, that was previously owned by an investor. Their initial rehab was obviously shoddy, and many corners were cut.

There are also a few flags waving such as: only a few small spots in the basement painted (were they hiding water stains or cracks in wall and foundation?), electrical mishmash (Knob and Tube wiring with a new 100 amp box placed in upside down!?) one or two newer support beams placed under a joist showing some signs of sagging...

I did the following:

1- had a 10 day inspection addendum in the contract with the right to terminate based on inspection.

2-Had a home inspector and contractor go through the place.

3-Built a "surprise repair" cushion into the purchase price.

With a house like this, however, I have a concern that even a good inspector and contractor could be missing bigger hidden things, only to be discovered while we are rehabbing.

What have your experiences been in this situation? 

Do you take the leap, or say "other deals out there, don't want to deal with the headache?"

How have you mitigated the risks?

Thanks for any thoughts-