Similar recent experience - I saw a duplex in the Renton WA. I love the location, however, the property needed lot of upgrades/remodeling. I hired an inspector to do pre-inspection and a contractor to give me an estimates. After considering all the upgrades, comps and, potential cash flow, my price came out to $100k less than what it was listed for. I put an offer knowing that it was unlikely the owner would accept it.
One thing to remember that it is still a seller's market. Additionally, as an individual you are competing against institutional cash offers. It is very to get carried away with the wind and buy it at the premium price. My suggestion is always do your due diligence and get best sense of what you are getting into. Given the market, you come up with the cap on how much premium you want to pay for the property (I usually keep $20k buffer) over your original offer. Anything beyond the buffer is no deal for my situation.
