Rehab risk

[Steve Funder]

I have an offer in on a property and I want to know if I am taking on too much risk.

The building will cost 70K with a down payment of 15K. Seller carry IO 55K for 5 years at 9%.

The building is 70 years old, with an original square footage of 500sqft. Additions have been made to increase the size of the building, with one 40 foot length of foundation being earth to wood contact, with the sill plate right on the ground. There is no evidence of termite infestation, but I will inspect and treat as necessary, then build a stem wall for that part of the foundation.

All utilities are at the site.

This is a large lot, the back of the lot is 30 yards away from a railroad. There seems to be an old, buried sidetrack that goes right up to the back of the lot.

ARV is 135K. I believe that I can rehab this place for 30K.

If I’m right, I can flip it for 35K profit, or buy and hold for an ultimate cash on cash between 10 and 15 cap.

What are the environmental risks involved with railroad sidetracks (I’m thinking repair and refueling, possibly herbicides or cargo)?

Does anyone have experience with this kind of termite code violation?