its a 7000 SQT free standing building 50 parking in a small town with about 4500 people its on main street right now is restaurant bar with 1 more year lease tenant would like to stay
NNN lease 4500 month asking 568k
tax 14000 year owner owes 375k mortgage he paid 500k for it 2004
how much should I pay for it and what things do I need to look out for and whats the risk
Investor · Fort Wayne, IN · Member since 2014 · 1k+ posts · 515 votes
11y
@Jason Li Welcome to Bp, you should introduce yourself in new member introductions, tell us about your goals and experiences (or lack of is ok too) are you financing this, is the owner or you bringing cash? A 9 cap could be a good deal, but whats market rate if the tenant leaves?
Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes
11y
I shudder at figures like that! Spending $568k for GROSS only 7% return?!!! (ie. there are a LOT more potential/actual outgoings than you have mentioned so far, and capital appreciation seems far from likely.
My advice:- run away as fast as you can! I wouldn't even encourage low-balling this one, as the figure would STILL likely be too high...
My response above mentions "a LOT more potential/actual outgoings" which I now understand NOT to be the case? But, Johnny P makes some what I would consider very sensible points: eg. "Make sure there is at least 10 yrs on the lease. Make sure the company is not struggling... Make sure the (next) lease is corporate guaranteed. This way they will continue to pay you for the duration of the (next) lease"...