Should I Run From this Un-Financeable Deal?

[Jacob Coulter]

I have a deal under contract and am trying to decide whether or not I should go through with it. I was planning on doing BRRRR but there is a foundation issue that makes it unable to obtain financing.

It is a 1200 sq ft ranch on footing with difficult to access crawlspace built in 1952. The footings have settled 5 inches (slope from back wall to the entry on the front. The Structural Engineer said it would be prohibitively expensive to jack it up and level it. He also said there are no signs it is recent and he estimates it was finished settling soon after construction. The slope is very heavily felt in the entry/living room but the bedrooms and kitchen have very little slope so I am guessing it will still be a very decent rental.

The current owner bought it for $43,300 to flip, had it under contract at $103,000 and again for $96,000 this year but both fell through due to inability to find financing. I have a cash offer of $52,000 on a house that cosmetically seems very nice in a great location, but I may never be able to get my cash back out. The current owner is definitely losing money with new roof, siding, cabinets, refinished floors, paint, etc. Apart from the foundation, it is ready to move in. The cash is from retirement accounts.

The $52,000 should return ~13.6% assuming 10% vacancy and 10% maintenance. (expenses ~ $367/mo and rent of ~$950) 

My concern is that I may never be able to finance it, and if prices start going down due to rising interest rates, the cash value of this might also get similarly depressed. I will have a much smaller pool of buyers if they have to pay cash. Also what happens to rental rates when housing prices go down?