Redding CA Potentail Purchase?

[Jack Vu]

Hey BP crew!

Jack Vu and newbie here and would love your thoughts on this potential opportunity. 

Redding CA Market:

- Hot rental market. Really easy to find long-mid-and short-term rentals.

- Currently a sellers market due to low inventory. Slightly cooling-off atm, taking14-30 days for homes to sell.

Our current situation: 

I bought a 2/2 fixer-upper (my first home buy) in 2018 and rehabbed It. With the rehab plus appreciation, we have no more PMI after our refi. Our plan is to hold on to the property and rent it out with $200-$800 in cash flow. Having gone through the work of rehabbing that property, plus having a 3-month-old, we're not keen on moving into a fixer-upper.

House Hacking Opportunity:

Having learned about house hacking, our perfect situation would be to find a home for our growing family with an ADU or other rental opportunities.

A 3/2 home literally down the street from ours came on the market where the prev owners rehabbed it, turned the garage into an ADU (and permitted it), and turned the master into it's own studio.

It's like a house hacked tri-plex! It's turn-key and no rehab needed (which we love).

- garage grossed $26,500 in 2020 (short term rentals)

- master bedroom rents for about $1700/m (short term rentals)

We plan to live in this as our primary as a 2/1 for a couple of years and rent out the 2 doors. Our exit strategy is to move out in a year or two with potential cash-out refi if home prices continue to climb. We'll hold on to the property and find another primary (while hoping to do my first BRRRR deal in the meantime).

My Query: 

Their asking price (450K) is marketed and priced as a 3 door income opportunity. It's definitely priced at the top of its range because other homes in the neighborhood are priced in the 250-400k range. 

What's the best approach to negotiating with the sellers? Any blind spots I'm not seeing? 

We love this opportunity bc:

- no need to rehab

- can cashflow our exit property (or break-even worst-case scenario) 

- Can cashflow and live for free on this new property 

- getting hands-on property management experience

We're cautious bc:

- most deals are made on the purchase, so if we buy too high, will that matter down the line?

Hope that's clearly laid out. Would love to hear y'all thoughts! TIA!