Termites found on home inspection. Deal breaker?

[David H.]

So I have a foreclosure under contract and they just found termites on the inspection.. Formosa termites, the worst kind. Wanted some input on whether it's worth pursuing or to just walk. The house is in a good area and ARV is probably $130k. I have it under contract for $65k and it probably needs 10-15k in repairs and updating (not including this termite issue). I would be using it as a rental that would get about $1100-$1200/mos. Rough estimate on treatment of the termites is $4k but the wildcard is the damage. I dont know the extent as the inspector said we couldn't determine without opening the walls. I dont have experience with termites but suspect it could range from minor to extensive damage which could kill the deal if it becomes a money pit. I really like the deal so am considering coming up with a ballpark estimate of damage and trying to re-negotiate with the bank. Just interested in hearing experiences and opinions that might give me some better insight since this is a new one for me.