How I Arrive at a Fair Offer on a Rental (Showing the Math)
Most owners who have gotten an offer on a rental have gotten a number with no explanation attached. Somebody walked through, or didn't, and a figure showed up. You're left guessing whether it came from the rents, from a formula, or from how low they thought you'd go.
I'd rather show the work. If I make you an offer on your building, you should be able to see where every piece of it came from, check my assumptions, and tell me where I got something wrong. That's what this post is: the actual steps I go through, with one made-up building as the example.
The usual caveat: I'm a buyer, not an appraiser, CPA, or attorney. This is how I build a number from the buying side. What a sale means for your taxes is a question for your accountant.
Where the numbers come from
Every offer I make comes back to four things:
1. The rents the building collects today, under the leases in place.
2. The expenses it actually costs to run.
3. The condition and what it will need in the next few years.
4. Recent sales of similar buildings nearby.
None of these are secret, and none of them are mine alone. A lender runs the same kind of math. So does an appraiser. So should you, before you agree to anything.
Step 1: Start with the rent roll
The first thing I ask about on a call is the units: how many, how many bedrooms, what each one rents for, how long each tenant has been there, and whether they're on written leases. That's the foundation. Everything else gets built on top of it.
I work from rents the building actually collects, not rents it could collect after a renovation or with different tenants. If a unit is under market, that's worth talking about, but I can't pay you today for rent nobody is paying yet.
I also take a small allowance off the top for vacancy and turnover. Units go empty between tenants, even in a well-run building.
Step 2: Subtract what it really costs to run
Next come the expenses: property taxes, insurance, water and sewer and trash if the owner pays them, routine repairs, and a reserve for the bigger items that come due eventually. I ask which utilities are tenant-paid and which are on the owner, because that can swing the numbers more than people expect.
Actual figures matter here. Twelve months of real expenses tell me far more than an estimate. If your books need some cleanup first, getting your rent roll and books buyer-ready before you sell walks through it.
What's left after expenses is the building's net operating income — what it earns before any mortgage payment. That number does most of the work in the offer.
Step 3: Check it against the financing
I finance my purchases, and I'm upfront about that from the first call.
The loan I use is based on the property's income. The lender looks at whether the rents cover the mortgage payment, with room to spare. So my offer isn't only what I think the building is worth. It also has to be a price where the building's own rents support the debt. If a price only works with rents the building doesn't collect, the lender's math will say so, and my offer has to follow the lender.
That's actually good news for you as a seller. It means my number is tied to something you can see and check: your own rent roll.
Step 4: Walk the building and price the condition
On the walk, I'm estimating. Roof age, the furnace or boiler, the electrical panel, the plumbing, windows, and what each unit's kitchen and bath look like. Some of it is routine wear that any older York County building has. Some of it is a known big-ticket item coming due.
I don't treat condition as a reason to walk away. It's part of the price. A building that needs a roof can be a perfectly good purchase, as long as the roof is accounted for in the number instead of discovered later and argued about. The more you tell me up front, the less there is to renegotiate.
Step 5: Check it against what actually sold
Last, I look at recent closed sales of similar buildings: similar unit count, similar condition, similar part of the county. Not what's listed, and not what's been sitting for months at a hopeful price. Sales that actually closed.
If my income-based number and the recent sales are far apart, one of them is telling me something, and I want to understand which before I commit.
A worked example (for illustration only)
Here's a made-up four-unit building with round numbers. It's not a real property and these aren't market figures. It's just to show how the pieces fit.
Income
Four units at $1,000 a month each: $48,000 a year
Vacancy and turnover allowance (5%): minus $2,400
Effective income: $45,600
Expenses
Property taxes: $6,000
Insurance: $3,000
Water, sewer, trash (owner-paid): $3,000
Routine repairs and maintenance: $4,000
Reserve for larger items: $3,000
Total expenses: $19,000
Net operating income: $26,600
Now suppose, for illustration, that this income — run through my lender's requirement that the rents cover the payment with room to spare — supports a price of around $300,000 for this building in good shape.
Then the walk. Say the roof is near the end of its life and two of the four units need their kitchens refreshed. For this example, call that $20,000 of near-term work. I'd take that off the top, which puts the number around $280,000.
Finally, the comps. If similar four-units in similar condition nearby have actually sold in that general range, the number holds. If they've sold well above or below it, I go back and look at which assumption is off.
In that example, you'd see every line. If you think my insurance estimate is high, show me your bill and the number moves. If the roof is newer than I thought, the number moves. That's the point of showing the work.
What this looks like in practice
On a first call, before I've seen the building or the rent roll, the most I can honestly give you is a rough range based on what you've described. A specific number comes after I've walked the property and seen the actual rents and expenses. If something on the walk or in the records is different from what was described, the number adjusts, in either direction.
If you'd like to know what those first conversations cover, I've written about what to expect when you reach out to a direct buyer and what happens in the first 48 hours after you reach out.
Price also isn't the only lever. Closing date, structure, and how your tenants are handled can matter as much as the headline figure. Pricing a rental for the fall buyer pool goes into that trade-off.
How I fit into this
I'm a local buyer here in York County. I buy 2-4 unit rentals directly from owners, I finance my purchases, and I hold what I buy. I own and operate a four-unit myself, so I price other people's buildings the way I'd want mine priced: off the rents, the expenses, and what the building actually needs.
If you want to see what that math looks like for your building, the free York County Landlord's Guide covers what to have ready. Or call or text me at 717-347-6770, and we can walk through it line by line. No pressure, no obligation.
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Related reading: what to expect when you reach out to a direct buyer, what happens in the first 48 hours after you reach out, pricing a rental for the fall buyer pool, and getting your rent roll and books buyer-ready before you sell.
Want to talk about your specific situation?
I'm Ed Lane at Yellow House Buyers, LLC. I'm actively looking to buy 2-4 unit rental properties in York County directly from owners. I buy to hold long-term — not to flip, not to wholesale. If you want a no-pressure conversation about your property, here's how to reach me.
Or download the free 2026 York County Landlord's Strategy Guide — it walks all six selling scenarios with the actual math.
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