2 storefronts+4bd apartment - full of GARBAGE & seller wants way too much

[Kristi Kn]

Hi! Looking at our first real estate opportunity here off-market for a building across the street - 2 storefronts ($1100 total rent) + a 4 bd/2bath apartment upstairs (could rent for $1200-1800)....but it's in absolutely horrible condition and the seller is asking way more than it's worth, especially in the condition it's in. He paid $155k, fair market was $105k when he bought it in 2022 and is $141k now; we estimate it needs $40k worth of repairs - some we could do ourselves, but at least $15k of that we'd have to hire out. Realtor told him he could get $160-180k.

How should we go about negotiating this down knowing he likely wants to get what he paid, even though no updates have been done and it's in worse condition 2.5 years later (and we'd have to do and/or pay for those fixes)?   Should we offer to pay whatever amount he still owes on it (assuming this is $130s somewhere)? 

Even though it's in bad condition, our incentive to buy is so another bad owner doesnt get it and continue the disrepair/place bad tenants across from us. It has a lot of potential in a highly walkable seasonally-touristy town with lake views....it's just incredibly filthy and broken right now.  Seller also lives 6 hours away out of state and we could pay cash and take it as-is, if he lowers the price.  So also the question for us of "how much is it worth to not have bad neighbors".

Full background >>

The tenant left a few weeks ago, leaving behind every bedroom full of garbage (to the ceiling), smoke smell in the house, broken toilet, ceiling was never fixed from water damage a few years ago, floors have dried cat vomit and rotting garbage stains, couple broken windows, federal pacific panel (fire hazard), they dont know if the heat works, the list goes on...

The seller overpaid for it in 2022 as part of 3 pack of rather delipated properties in town. We know he paid $155k for this one, but he's said "the realtor thinks I could get $160k if i dont do anything, or $180k if we make a couple updates".   Parcel valuation is $89k. Fair market value when he bought it was $105k and is now $141k.  We've estimated repairs could be $38k-48k if he hires them out, and likely would take several months (if you do it right). 

The basic fixes for sanitation/safety alone would be $7-17k; then another $23k for a "normal" human to want to live there (redo floors to get rid of cat vomit, fix broken windows and screens, paint walls/clean up all cobwebs, make bathtub not be nasty); then another $6k for things that are technically a city ordinance (but it's not really enforced) like a broken exterior door, abandoned car in the lot, graffiti; then another $8k for "nice to fix" things like removing old radiators, replacing broken blinds and trim clawed by the cat, fixing ceiling damage in the stores.