General Creative Financing Question

[Scott Vaeth]

Hi BP,

I found a property with a detached garage that I'm hoping to convert into 1-2 units. The house itself needs little updating (paint walls, remove popcorn ceilings, update fixtures, paint kitchen cabinets and replace kitchen countertops). I want to leverage how long it's been on the market in my offer, but wanted to get people's opinion on what to do. I fear that I'm lowballing if I was to use the 70% rule since the house itself is valued around what it's worth. From what I can see, the house only needs $2.5K-$5K worth of work and I plan to do everything myself as it's my first property. If I plan to convert the garage into 1-2 units, how should I factor that cost in my offer? Offering over $100K less than asking seems insulting. 

For context: The listing agent claims that there hasn't been many negative comments towards the house, but I think people fear potential noise of being next to an auto shop. Its taxes are also high for the area and is currently vacant. Any advice is greatly appreciated!