Key Takeaways:

Vacant properties still have value – you must underwrite future income and back into what you can pay today; don’t let brokers sell you tomorrow’s value at today’s price.

Start with market rent per square foot – use similar properties, OM data, LoopNet/Crexi, and broker conversations to estimate realistic market rent, then compute gross income and NOI (after vacancy and operating expenses).

Use NOI and a market cap rate to get stabilized value – value = NOI ÷ cap rate; track offering memorandums in your market to understand realistic cap rates for different asset types and conditions.

Build in margins for risk and returns – target a required equity multiple (Tyler uses 2x over 5 years) and make sure your maximum allowable offer (MAO) leaves room for both value creation and investor returns.

Two main MAO approaches – (a) pay no more than ~75–80% of stabilized value all-in, or (b) start from stabilized value and subtract required profit, capex, TI, lease-up commissions, and carry costs to get your max purchase price.

Don’t ignore non‑purchase cash costs – beyond the down payment you must plan for closing costs, tenant improvements, leasing commissions, construction/renovation, and carry costs during vacancy; these can easily push your true “all-in” basis much higher.