First "Deal" Looking LIke a Flop! What am I missing?

[DeAnna Henson]

Hello Everyone! I have my first "deal" under contract after a year of education and missing out because of analysis paralysis. The property is 2/1 850 SQFT and has had a 15 year tenant that is currently being evicted. She has smoked in the house every day, every part is run down, and the list goes on. Essentially, this is a total gut and rehab. I have pulled material pricing from home depot, and walked the property with 2 contractors and multiple inspectors. We've found termite infestation and other items that were not accounted for. When I run the numbers, the cost just seems astronomical and doesn't make sense, but at the same time, this is such a small house for a ~$50,000 rehab! At this point, I'm going to go back to the seller and ask for ~$12,000 off but I doubt she'll go for it. Even then, not a great deal.. I know I could make it work if I decided to do the work myself, but that shouldn't be the default. I feel like I'm one of those people that's just "buying something" to get started. See the brief numbers below: Original Scope Cost Notes Demolition Labor Cost $4,250.00 Quoted Construction Labor Cost $15,710.00 Quoted Material Cost $12,805.00 Ref - Home Depot Permitting/Fees $2,500.00 Ref - Development Services (estimated) Additional Scope Cost Notes Subterranean Termite Treatment $1,021.88 Quoted Dry Wood Termite Fumigation $2,659.81 Quoted Carpenter Bee Treatment $161.29 Quoted Replace Misc. Termite Damaged Studs $1,000.00 Assume replace 20 EA studs Rodent Extermination $150.00 Quoted New Roof $5,750.00 Quoted - Partial re-decking at 10 sheets New Hot Water Heater $750.00 Assume $500 water heater and $250 install Replace Aluminum Electrical Wire $300.00 Assume 4 hours @ $75/HR Total Rehab Budget $47,057.98 Contingency at 10% $4,705.80 Original Purchase Price $45,000.00 All In Cost with Original Purchase $96,763.78 ARV of Home $95,000.00 Based on Comparable Additional Scope $11,792.98 New Purchase Price $33,207.02 All In Cost with New Purchase Price $84,970.80 Any advice?