Seller valuation based on GPR?

[Rob Bird]

Hi all..question about valuation.  In a smaller property with high economic vacancy, is it reasonable for a seller to use market rents to value the property?  Specifically, if the property could be rented today, without any renovations, at a higher rate but the seller up til now has chosen not to, should they expect to be able to base the sale price on gross potential rents?

[Reed Rickenbach]

They will always try. However, if your plan is to purchase and increase rents, YOU are the one taking the risk. I usually land somewhere in the middle in this situation. You should get a discount based on vacancy. You should not be paying a premium before the work is even done.