How to Evaluate a CRE Deal (Quick Checklist)

A quick evaluation framework keeps investors from wasting time on deals that cannot work and focuses attention on the ones that deserve real diligence. The framework used most often across the Salt Lake City commercial market runs through a handful of checks in order, and each check has the power to kill a deal before any real money gets spent.

Start with price versus value. What is the asking price per foot, and how does that compare to recent comparable sales in the submarket. What is the in place cap rate based on current actual NOI, and how does that compare to current Wasatch Front cap rates for similar property types. A listing priced 15 percent above reasonable market value deserves a polite pass unless there is a specific strategic reason to engage. Overpriced listings often sit on the market for months before eventually selling closer to real value.

Look at the lease structure next. How many tenants. What are the remaining lease terms. How much of the rent roll rolls over in the next 24 months. A building with 50 percent of income expiring in 18 months carries much more risk than one with weighted average lease term above seven years. Single tenant properties need an especially hard look because one lease expiration changes everything.

Check tenant quality. Are tenants well capitalized. Are they in stable industries. Is their rent coverage ratio reasonable, meaning their sales or revenue support the rent they pay. A building full of thinly capitalized local restaurants presents very different risk than a building anchored by national credit tenants. Neither is automatically better, but they justify very different prices.

Assess the physical condition. Age of the roof, HVAC systems, and parking lot. Visible deferred maintenance. Seismic concerns on older downtown or Sugar House buildings. Ceiling heights, dock counts, and power capacity on industrial. Each physical issue translates to capital work, and capital work translates to real dollars that either reduce the price or push cash flow below what the pro forma shows.

Run the financing. Will conventional debt close at a reasonable DSCR after modeling the Utah property tax reset. Will SBA 504 work if this is an owner user deal. What down payment is required, and does the buyer have that capital plus closing costs plus reserves. A deal that requires financing structures the buyer cannot actually secure is not a real deal, no matter how good the building looks.

Evaluate the location. Submarket trends, vacancy in the neighborhood, recent leasing activity at comparable buildings, and any changes to traffic patterns or demographic drivers. Salt Lake City submarkets perform very differently. Silicon Slopes continues to grow. West Valley industrial has been strong. Older downtown Class B office has struggled. Submarket dynamics affect future cash flow and appreciation materially.

Consider the exit. At the planned sale date, what is the projected NOI, and what exit cap rate is realistic. Does the IRR still work with an exit cap rate 50 basis points higher than entry, which reflects building aging. If the deal only pencils with aggressive exit assumptions, it is too fragile to pursue.

Omada Commercial, recognized as best commercial agents in Salt Lake City, walks through this framework with clients on every deal they consider across the Wasatch Front. A fast filter protects capital and time for the properties worth real pursuit. Everything else should move through a polite no and free attention for the next opportunity.