4 unit multi-family inspection

[Tom Kaz]

So I’m in the process of closing on our 3rd multi family property. The most recent one is in a suburb just outside Chicago’s borders. I’m under contract to purchase the 4unit building for 253k. Comps sold in the area range from 285-315k so there is some equity to be had! 2 out of the 4 units are decently upgraded. And cashflow after all expenses can be around 1k.

We had the inspection today and for the most part it was pretty good until we hit the crawl space. Inspector noticed mud trails, rotted out 2x4 sills and water leaks here and there. No vapor barrier so moisture is present 100%. There are about 3-4 spots where the subfloor is rotted out and you can push your finger thru the boards. I was all In for closing until we hit that crawlspace and my eyes were opened by the underlying problems.

Seller stated that termites and pest control was completed on 2015 and that the “termites” where taken care of. He has also agreed to credits and fixing subfloors and what not.

Would you proceed forward in this situation or should I back out? I get the inspection report tmrw but I was down in the crawl when it was being completed and he didn’t sound to happy about the findings.

Any advice?