Offering on a 50% vacant property

[Khizar Hanif]

Any advice as to offering on a 50% vacant multi? Owners purchased back in 2014 and did some repairs to everything but the units themselves. 2016 was stabilized and started to fall off thereafter. Went from $140k NOI (2016) to about $40k NOI (2018). Trailing the same NOI this year (due to property being half vacant). Reason-property management was stealing from them.

40 Units

May be a good opportunity to go in, rehab, and lease up. Market is pretty strong. I definitely want to submit an offer, but not sure where to begin. If I value the property as is today at a 6.5 cap (market rate), using $40k NOI I'm at $615k (15k/unit). It's definitely worth more than that, but I need to come up with a fair offer. I don't think its fair to base solely off of pro-forma numbers, but somewhere in between..after all, it will take me time, effort, and money to get to pro-forma, so I need to factor all of that into my offer.

Sellers are not motivated to sell. They are just considering offers. I did hear they have an offer at $2M (50k/unit), I would just like to know how the buyer came up with that number?

I haven't walked the property yet. I know I should do so with a contractor to determine rehab budget but I would like to express interest at this time, and tour sometime in the next couple of days...since there are offers already. 

What factors should I consider to arrive at a starting offer and what are some creative ways of going about this kind of deal?