Termite Damage - Should You Take on the Unknown Repairs?

[Chris Furcolo]

I've made an offer an a single family investment/rental property in Massachusetts.  We plan to buy and hold and rent it out for 5+ years at least.  The inspection revealed termite damage that may require the entire sill to be replaced.   The sellers are offering us a credit on the purchase price, but will not fix damage themselves, nor will they allow us to conduct our own estimates with our own contractor.  They have provided the termite report, and shared what the suggested remediation is (but even that report admits that they cannot see all damage until siding is removed).  So here's my question:  While risky (considering we can't be sure the extent of the damage), the numbers still work for us.  We will have to invest more capital than we originally planned to fix the damage, which will lessen our ability to re-invest in other properties, but the cash flow and rate of return on the property still work even if we estimate out what we think repairs will cost.  So what would you do?  Take on the risk considering the numbers likely still work?  Or, avoid the unknown of possible pitfalls and further unseen damage that we'd be taking on, and save the capital for another investment?  I've read some blogs and done some research on repairing termite damage (particularly replacing the entire sill) and unfortunately the feedback varies wildly from "absolutely walk away" to "it's not that big of a deal".  I'm interested in hearing from investors on this...