Ended up offering 50k for the property, as I knew some of my rehab cost was inflated anyway. couple days later my realtor got back to me and someone offered 79k for the property, which is the listed asking price.

Is it a percentage of inflation or is there some other way to do that?

I don’t see the value to you and this comes from not only an investor, but also a GC.Padding costs, ordering 5 gallons of paint rather than just the needed for and using 5th gallon for another jobsite, inflating labor costs, etc are all risks you will be taking in such an arrangement and many of them are difficult to catch.

Vacancy is low.Repairs are low (2 furnaces, 2 ACs, etc = high capex).Nothing in here about leasing fees which can be substantial especially on a multi-family.You're banking on the property appreciating faster than expense/rent inflation - why?

I personally welcome higher interest rates and inflation.

I currently have 2 buy and holds in the areas you have described below and live in Flat Rock. 

However, if we keep the properties we would have to most likely switch over to gas, which would cost an additional $7,000/per unit approximately, as quoted by our GC, which would inflate our rehab costs by $28,000!

I also see the market as inflated. 

Upon a sale, the amounts received from this deal would eat into the exclusion.9) The appreciation rights of the investor and the note could be sold off to other investors if either party got impatient.10) A maximum LTV on mortgages on the property in the range of 60% could be established to reduce the likelihood that the seller gets behind and does a short sale that wipes out the investor.11) If this arrangement might cause a problem for the homeowner when refinancing or taking out a HELOC, the investor could agree that the investor's interest is subordinated.Benefits: The homeowner's net worth is less concentrated in Silicon Valley single family home performance, and the investor gets a leveraged return on an asset that has potential to appreciate at faster than the rate of inflation.

Real Estate in general goes up with inflation.