How do others think about purchase prices/multiples when there’s significant real estate values. I note that I want to purchase the real estate (for longer amortization, long term security and allowing me to take advantage of some passive real estate losses I can’t otherwise deduct).

For example, let’s say the business is a $500k SDE business and the seller is asking $3mm and claims the real estate is worth $1.5mm. Assuming I’m comfortable with that price, my thought is to say in the LOI that the price is $1.5mm + the appraised value of the real estate up to $1.5mm.

Thoughts? Alternatives?