BiggerPockets

Assuming it is leased out at $10 per sq. ft. annually, and it is leased on a NNN, your potential gross income is $110,000 and your expenses should not exceed 25% of the gross.

That would make your max NOI at $82,500.
On the low end for valuations, you stated they are $75/sq. = $825,000
That comes out to a 10 cap.
Since you have no income at 100% vacancy, you have to buy buy the pound and not off the income since there is none.
I would not pay more than 50% as the absolute max, thus $412,500 and would probably offer something along the lines of $350k ALL CASH since it also requires $60k in deferred maintenance.

Thanks Will. Your thinking is very much what I was thinking. I just got off the phone with the broker and it went under contract today in the mid $400's. He is checking to see if the buyer would be open to flipping the contract. Or the property. I was guessing on the deferred maintenance. Broker says all it needs is paint and carpet, which we could do for $25K. Of course the real expense is the vacancy.

Thanks Kevin, this is an REO, so I don't expect much from the seller.

Here's my quick and dirty due diligence check list off the top of my head.

Structure/foundation--get structural engineer to inspect.

Roof--I have a commercial roofer, good on this. Word is that the roof is great.

Environmental--Phase 2 or 3 inspection and report.

Mechanical--My commercial heat and AC company can check this out. With the building at 25 years old, I expect to see some issues.

Electrical--Have commercial electrician check it out. I don't expect problems here.

Plumbing--Also don't expect problems here.

Elevator--No experience, so will get this checked.

Landscape/irrigation/parking ingress/egress issues

Glass and exterior facades

All interior surfaces and fixtures

Security issues

Internet/phone access

Examine all suites, common areas, and service areas, all I can see, smell, touch, etc.

Anything else on physical due diligence?

Originally posted by Kevin Yeats

I'm no expert in that field.

The broker's comment "carpet & paint" is like a used car saleman saying "Tires and oil change."

No doubt. Only "location, location, location" comes before "do your own due diligence." Wait, maybe due diligence is first.

Originally posted by nationwidepi

Even if it is true that the repairs are only $30k, your max offer should still be only $380k. The fact that it is locked up for $400k and then tack on an assignment fee, you would be paying too much in my opinion.

Wait and see if it falls out of escrow or NEXT!

You are so disciplined. This really is a great location--Preston Rd & 190. But... I... will... hold... OFF (for now).