This does not appear to be a good deal for a buyer who has the ability to qualify for conventional loan terms.The seller has structured a deal that allows them to net more money through a combo of factors, including the price, the above-market rate, and the loan terms.

As for the termites, I'd factor in a tenting, and replacing the siding and trim, it seems unlikely they ate enough to significantly damage the structure but a termite report would tell you that, which if that is the reason they fell out, they may already have a copy of or at least knowledge of.

That makes their cap rate at 10%.How much really does the house factor into all of this, it cant be 50%.

But with maybe 15 year service life here in FL, age really isn't a factor for these unless your looking at brand new builds.The biggest thing to consider, in my way of thinking, is the neighborhood.  

Most properties that old have done the majority of their settling, unless it is on a hillside or some other factor that could make it worse over time.

However, I have heard of one case where the lender required a "whole house" arsenic treatment system, which are about $2500-$3000 installed. 

Look for deal killers like higher than expected taxes, or owner paid water sewer bills need factored in.

Hi @Ryan Sullivan, I'd say the biggest determining factor in this is your market. 

If you are planning on doing repairs yourself remember to factor in your holding costs and the longer you hold the more risk you take in a market change.

I didn’t factor much for my capex because honestly, as nice as the cash flow is, I probably wouldn’t touch it for a little while and just let it build me a savings.