Good Afternoon on this Memorial Day 2017!
I believe that in any investment, it makes sense to know going in as to when you recoup your original investment. In other words, I like to see how long it takes to get my original investment back in cash flow alone.
This getting your investment back through cash flow doesn’t apply in every NNN purchase, but I still think it should be included in the pre-purchase check list.
The Power of 2%
We recently had a brand new Church’s Chicken restaurant for sale in Tennessee. It was priced at $3,150,000 at a 6.30% Cap Rate. The initial term of the lease was 20 years and offered 2% annual increases in the rent for the full 20 years plus into the options.
In doing the math, our investor would get all of their original investment back in just 14 years ($3,181,351 in rent) AND if they elected to continue to hold the property, they would receive an additional $1,657,633 in rent in years 15 through 20. Over twenty years of the lease they will have received $4,838,884 in cash flow (remember $3,150,000 was their purchase price). And if the options are exercised, their rent continues to grow at 2% per year.
In my opinion, what makes this Church’s Chicken such an attractive investment is the math. The 2% annual increases over 20 years allows them to get their investment back in only 14 years, which gives them the flexibility to decide on their own terms whether they want to continue to hold the asset or move onto to something else.
And a property with 20 years of primary term and annual increases just gives you and/or your survivors more flexibility when it comes to re-trading the asset and maintaining value.
You’re going to see some 20 year Primary Term Properties being offered on this
Week’s Digest. And you’re even going to see some 4% Annual Increases
on a couple of offerings.
This Week’s Digest is a snapshot of a variety of Triple Net Leases Single Tenant properties that have been sent to me by a variety of commercial real estate brokers from all over the US. What I’ve selected & am showing here is designed to give you a “flavor” as to where Cap Rates are on a variety of NNN properties with different credit strength of the tenants, different lease maturities and different locations.
Let me know if you have questions or require additional details on any of the properties listed. And if you don’t see what you’ve been looking for, let me know & we’ll be happy to do a National Search.
Again, save yourself a ton of time & effort by having us do the “heavy lifting” when it comes to finding NNN properties. There’s just no way that you can access the same properties that I see. Simply put, our Concierge Service can not only save you a ton of time, but it will also put properties in front of your that you most likely wouldn’t have seen. Let us do the work for you.
I have attached below for your review this week’s issue of our Weekly NNN & 1031 Property Digest.
As always, if you have Questions or would like us to help you with a property search, don’t hesitate to reach out to me.
Have a great week & let me know how I can Help!
Remember: Our Digest is just a “snapshot” of the types of properties that were sent to us this week from various sources all across the country. If you don’t see a particular tenant that you have an interest in, just reach out to us and we’ll go find it if it’s available.
This Digest is simply a posting of some of the daily email blasts I receive from brokers all across the country every day. It is designed to give you a “flavor” as to where the market is currently in terms of Cap Rates vs. Tenants vs. Length of remaining Term. These properties are all available for Sale at the time the Digest was pulled together. If for some reason you see something on our list and it is no longer available, chances are really good that we can find you a very similar listing in terms of Tenant, Cap Rate, & Term in a very similar Location.
Use the Digest as a tool to get an understanding as to “what’s out there currently”. Once you know the type of property you’re interested in, we can help you find the property, submit the Letter of Intent and begin your Due Diligence process.
Let me know if I can provide any additional details or answer any questions.
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