Updated over 10 years ago on . Most recent reply
Discount Factor for Vacancies
Do any of you use a ball-park factor when buying properties with vacancies? You'd be assuming the risk that the unit(s) will remain vacant for 6-12 months.
Example:
You're looking at an office building with 2 out of 4 units leased (say, for the next 5 years).
The rent from all 4 would produce 100,000 NOI.
Property is worth $1,000,000 fully rented.
All things being equal, what would you knock off your asking price?
Sorry for asking the question like a standardized test but couldn't think of a better way to express it.