The pro forma (potential) income from those vacancies can be used to evaluate the actual value of the property and the future value.

I am trying to identify the advantages and disadvantages between the two and I am not adverse to spending more money upfront to form a solid foundation.

Construction timing, leasing and hitting their pro-forma numbers.

@Matthew Bruce BaileyOne could be pro-forma Cap Rate (when every unit is 100% occupied), the other Cap Rate could be as-is.

The risk is you overpay because you buy with your eyes and not your pro-forma. 

@Nick B.Hi NickYou know it's a hot market when sellers and brokers are pricing on pro forma & getting their ask.  

Amy,The best way to "practice" a MF deal is to identify a number of properties that you find to be of interest to you and run the numbers on each of them to see how they perform unto themselves and comparatively.The best way to run the numbers is to either create or access a pro forma workbook that you can use to uniformly analyze each property.

Their offered pro formas had 6-7.5% cap rates if I am remembering correctly, but the assumptions were laughable.This is not my area of expertise but I would say you'd likely be looking in the 3.5-4.5% range.

Redfin will list it and there will be no PDFs telling people who much money they can make, how to house hack it, what the annual expenses are, if there is a pro forma rent based on upgrades they can do.

Then we compare Cap Rates to determine what's the best Investment at that time.Then a second analysis needs to take place which calculates the future 10 year pro-forma IRR.