Portland OR SFR zoned industrial

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Dear Portland people, 

I've been in contact for over a year on a SFR zoned industrial in 97211. Originally there were some boundary issues that I wanted investigated, and the surveyor found encroachment issues (between properties in different zones) so the city had to get involved yadda yadda and it's dragged on.

I can back out if I don't like the new boundary they come up with. If they ever finish. 

Anyway, my partner is starting to have second thoughts because of the industrial zoning. It's a 1000sf (not including basement) house with lots of deferred maintenance on 1/4 acre. It's also on a busy 2 lane road (far back from the road, but still...) and you have to back out of the driveway onto the road. 

Also disclosure said septic but now the LA is throwing around the word "cesspool" in her emails, so it could be a cesspool instead of septic. 

Views from back yard are amazing. Lot is huge. Unfinished daylight basement could be finished. Original built-ins and fir floors from 1920's. Foundation is surprisingly solid.

Repairs/replacements needed include siding, roof, windows, electrical, sewer hookup, water lines, and all cosmetics. 

Contract price: $140k. Market rent is about $1300, maybe more with some light rehab.

I personally think it could even just have some light cosmetic work done and leave major rehab to the next buyer, maybe do a 1031 exchange, and flip for $200k.  My partner (not *business* partner) thinks that the industrial zoning makes it not a good deal. He's afraid buyers would have a hard time financing. He is also a residential RE broker.

My concern is if it's really a cesspool and not just a septic. But I guess it needs a sewer hookup anyway...

Do Portland folks think there  are too many moving parts for that price? I feel like anything that price, regardless of condition or zoning, is a good deal, especially west of 42nd. The land might be worth that alone.

Anyone have experience with industrial zoning for a SFR?