$40K potential septic repair on a $40K house…what to do?

[Larry Bowers]

How often do septic tanks back up to where the owner is forced to do something about it, say with sewage backing up in to the yard or the basement?

I realize the answer is “it depends” but here is more information.

The house in question is 1950s built 2 / 1, 900 s.f. with septic tank in an area where 95% are connected to sewer. House is worth about $40K, it’s a C+ neighborhood. No DOTs or liens against the house. I’ve had the house for two years. No septic issues, and it’s a tight little house getting a 2% rent to value ratio without major tenant hassles.

I've had a mind to sell the property, but agents have told me that buyers using FHA loans will require a septic inspection (have not verified this). Calling around to different septic tank / sewer contractors, they are telling me that a septic tank that is 70 years old will almost certainly fail a septic inspection, which kills the prospects of most retail sales. That generally leaves selling to another investor as-is.

The septic contractors have told me to expect at least a $10K to $40K job to fix the issue if the worst happens, such as with backup into the yard or the basement. Those prices are estimates whether I fix or replace the current septic tank or connect to the sanitary sewer (about 30 ft away and downhill). That’s serious dough for a house worth only $40K. The city, county, and sewer company tell me they don’t help out with the cost, it’s all put on the homeowner.

I suppose what I have now is a failing tank that’s leaking, but otherwise not failing in the sense that it likely won’t come back up into the house. Or will it? It's working now and it's 70 years old, so maybe it will just continue...or am I teetering on the edge? 

So, do I roll the dice and keep it, get the sludge cleaned out periodically, treat it with chemicals and what not, or, should I move on and sell it?