The contract does say that if the bank can't guarantee a clear title I get refunded     But if something comes up  On my title search from years ago,  there will be a problem and I might have to walk away   

Thanks James I like the idea of walking in with branding in mind.

My opinions of this place after I walked it this weekend is still its good for a tear down and new construction.

I bought it with my brother 5 years ago and the first thing I did was make the walk out basement a separate living area(no permits).  

Is it worth investing the time and $$ to determine the extent of the damage or should I just walk away?

Depending on the owner's mortgage, they may even be able to walk away with $10k for relocation from their lender.I know a guy who is great at working these types of situations.

The point should be to get into contract so somebody else cannot "pinch" your deal.Example of the the gold medal: My 6 unit building, all 1/1's, within 10 min walk to a BART station. 

@Sylvia B.I will walk you through my understanding using the 2015 rules and assuming that this is the only activity you had in 2015.The mechanics of the computation are based on taxable income.

Shop around at local banks and you may be able to find someone to work with you that doesn't require the seller's prior tax records on the property and may approve you based on the rent roll, walk-through, and other factors. 

Both showed up in the city permitting so no issues there.Frame new bedroom in front portion of houseRepurpose laundry room into master bath suiteRepurpose current master bath into master closet and washer/dryer closetEnlarge openings into kitchen and family roomTotal kitchen gutReplace all windowsRelocate front doorAdd front deck and replace back deckAdd central heat/air as the house had window unitsWhen we first walked the property the front room felt like it sloped.