Questions on flip financing

[Andrew Gudmunson]

I found a vacant property that would make a great flip at the right price. I've written the owner and we've been negotiating some, and I have a local contractor that I'll be partnering with on the deal. My question is this: I'm thinking about using a HELOC to fund my down payment and getting conventional financing for the rest of the house. I already have a primary residence so I'm planning on paying 20% down. The owner bought this house at auction about 3 or 4 years ago, and then his health went way downhill and he has done nothing with the property. He's fairly motivated to sell. However, this just came up in negotiations, the owner informed me that some pipes burst last winter and caused some water damage to the house, I haven't seen pictures or heard what the extent was but my partner assures me it won't be a problem and he and I both have plumbing/restoration experience, although he has far more than me. In light of the damages is this a project a bank would fund at all? Should I expect to pay a much higher down payment %? Or should I pass on this project altogether? All advice is appreciated!