4-Plex- High price but significant value adds

[Spencer Fry]

I have a 4-plex I'm currently looking at potentially trying to buy. The area I live in is a high summertime tourist area. As it stands, the numbers do not work to purchase the property at current asking price. Now the rent roll is under market value by about $150-$200 per unit. Also, the electricity meters are located in the basement of the building so the power company won't read the meters, so the current landlord is paying utilities. The utilities average around $400 a month. Is it okay to charge an extra $100 a month to each tenant for Utilites? This property also sits on 1 acre in the country so I believe there is also some significant value adds that I could plug in to add $300-$500 a month. Besides all those factors, I do believe I could convert 1 unit into an STR this summer and potentially double the long-term rent rates. I could possibly convert more units depending how successful the 1st one does in the STR game.

My question is this, does it make sense to pay the higher price? It's been on the market 8 months. The current owner doesn't seem to want to budge on the price. It just seems a little silly to me to pay that high of a price, when after I do all these value adds to the property, from an investor standpoint and based off the 1% rule it would really only be worth $20-$30k more than what they are asking now. Should I be worried about the 1% rule? We do live in a high appreciating area with mountains, lakes and a national park out of our back door. 

Any and all advice would be greatly appreciated!!

[Nathan Gesner]

Quote from @Spencer Fry:

The 1% rule is designed to be a filter for quickly determining whether a property should be analyzed more closely or dismissed. I highly recommend you wrap your head around this before it gets you into a pickle.

Here's a guide that describes what good cash flow looks like and how to analyze a property. https://www.biggerpockets.com/...

Take the actual numbers and plug them into the BP calculator or some other analyzation tool. 

It doesn't matter what the seller thinks it's worth; it only matters what it is worth to you. If you have to buy the property at $250,000 to make it work, then offer $250,000. If they won't sell for that price, then walk away and look for something that works.