Episode
375. Why I'd Rather Buy an Empty Building Than a Full One Right Now
- Published
- Apr 30, 2026
- Duration seconds
- 2288
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- https://www.tylercauble.com/podcast/episode375
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Summary
Vacant buildings = more upside You avoid paying a premium for someone else’s lease‑up work. You create value through rehab + leasing (forced appreciation), not just clip coupons. Stronger negotiating position Vacant = motivated seller; you have more leverage on price, terms, and concessions . Priced by $/sq ft , often at or below replacement cost . Cleaner from a legal/lease standpoint No legacy leases, estoppels, co‑tenancy clauses, or messy files to inherit. You set your own lease standards from day one. Market conditions favor existing vacant buildings High rates + high construction costs = very little new supply . Low national vacancy (≈4–5%) = strong demand for quality space that already exists. Math can be dramatically better than stabilized deals Example: All‑in at ~$928k vs. stabilized value at $1.85M → $900k forced appreciation . Vacant strategy can create multiples more equity than buying fully stabilized for cash flow. Vacancy risk must be planned for Keep 6–12 months of operating costs in reserve (or financed/raised). Underwrite 12–18 months to stabilize; don’t assume instant tenants. Brokers and data are crucial Good brokers (commission‑only) protect their time—bring serious deals and a clear buy box . Use them for rent comps, TI norms, free rent, and realistic lease‑up timelines . Strategy is for growth‑focused investors, not retirees Best for those aiming to build wealth and scale a portfolio , not live off immediate cash flow. Holding 3–7+ years lets you maximize NOI growth, tax benefits, and 1031 options.