Feedback on NN opportunity in Port Charlotte FL

OP

Member since 2022 · 47 posts · 7 votes

4y

Quote from @James Storey:

At first I thought it was priced aggressively at a 4.25% CAP but looking at the rental rate, I think there could be some upside potential from rent even if Sherwin Williams left the space. Looks like Sherwin Williams is paying right under $9sf NNN which is pretty low but you would have to wait 6 years to get any chance of a rental increase. If there is already renewal clauses in the lease at give rates then the value add aspect is out of the window unless you held it long term.

Repositioning would be rather simple in my opinion. The open box could be anything but may need some TI to make it right for the right tenant.

James Storey, CCIM

Thanks for the feedback, good point on the attractive rental rate in terms of tenant retention (or marketing at a higher price point to a new tenant).

Since it's only NN and less than 7 years left, I think cap rate of 4.25% is too low for me. I would want to see closer to 6.5% cap rate. But at that price point, would be looking for less than $600K, not $800K.

Ronald RohdePro Member

Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes

4y

I'd pass. write up your offer, submit and move on if you want to try and lowball.

What the seller bought for is irrelevant for your value. It may be worth $700k to someone else, why does he care what seller paid?

OP

Member since 2022 · 47 posts · 7 votes

4y

Quote from @Ronald Rohde:

I'd pass. write up your offer, submit and move on if you want to try and lowball.

What the seller bought for is irrelevant for your value. It may be worth $700k to someone else, why does he care what seller paid?

Thanks. Of course I understand that any property is only worth what someone is willing to pay at the moment. Just pointing it out to show how much the property value has gone up in such a short time, assuming it sells near 800 K. To me that MAY signal a frothy market that is due for a correction.

Ronald RohdePro Member

Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes

4y

Quote from @Dan Cahill:

Quote from @Ronald Rohde:

I'd pass. write up your offer, submit and move on if you want to try and lowball.

What the seller bought for is irrelevant for your value. It may be worth $700k to someone else, why does he care what seller paid?

Thanks. Of course I understand that any property is only worth what someone is willing to pay at the moment. Just pointing it out to show how much the property value has gone up in such a short time, assuming it sells near 800 K. To me that MAY signal a frothy market that is due for a correction.

Even if it trades at $800k, I wouldn't worry about a frothy market. I was watching multi family prices in 2017 go up. I didn't buy back then because I thought it was frothy. Each successive cap rate and trade has the buyers laughing all the way to the bank!

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Joel OwensBusiness Member

Moderator

Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes

4y

Correction? 2 million dollar NNN is like a 200k house. Huge buyer pools and most pay all cash. Properties can get 12 offers within 48hrs.

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John M.

Investor · Fairfax, VA · Member since 2015 · 1k+ posts · 801 votes

4y

I like this deal at a 5.5 cap. Some of the bigger players can buy better assets at 4.75% valuation so they could pass on this one. I would make an offer, just make sure you put enough cash down to make it cash flow as interest rates are going up!! My portfolio is full of these kinds of deals, but that's just because I'm conservative and patient.

OP

Member since 2022 · 47 posts · 7 votes

4y

Quote from @John M.:

I like this deal at a 5.5 cap. Some of the bigger players can buy better assets at 4.75% valuation so they could pass on this one. I would make an offer, just make sure you put enough cash down to make it cash flow as interest rates are going up!! My portfolio is full of these kinds of deals, but that's just because I'm conservative and patient.

Thanks! It's under contract but if it falls through perhaps I'll have a chance to submit an offer.

OP

Member since 2022 · 47 posts · 7 votes

4y

Quote from @Joel Owens:

Correction? 2 million dollar NNN is like a 200k house. Huge buyer pools and most pay all cash. Properties can get 12 offers within 48hrs.

Good perspective, thanks. Still, value has gone up 68% in 3.5 years (assuming they get full asking price) based on what it sold for in 2018, without major improvements made it appears.

OP

Member since 2022 · 47 posts · 7 votes

4y

Quote from @Ronald Rohde:

Quote from @Dan Cahill:

Quote from @Ronald Rohde:

I'd pass. write up your offer, submit and move on if you want to try and lowball.

What the seller bought for is irrelevant for your value. It may be worth $700k to someone else, why does he care what seller paid?

Thanks. Of course I understand that any property is only worth what someone is willing to pay at the moment. Just pointing it out to show how much the property value has gone up in such a short time, assuming it sells near 800 K. To me that MAY signal a frothy market that is due for a correction.

Even if it trades at $800k, I wouldn't worry about a frothy market. I was watching multi family prices in 2017 go up. I didn't buy back then because I thought it was frothy. Each successive cap rate and trade has the buyers laughing all the way to the bank!

Thanks for the perspective. I like the property but it's under contract at the moment, so I'm keeping my eyes open on others.