Mcdonald's not doing well.
This is exactly why I tell my clients not to buy these low cap properties.
http://www.cnbc.com/id/102799994?__source=xfinity|mod&par=xfinity
If it has the parent corp. guarantee at least you have that revenue stream but if a franchisee guarantee you can be in trouble. even parent corp. guarantee at a low cap doesn't make sense.
Stuff trading at 4 caps for 2 to 3 million for a Mickey D's is scary. I just saw Longhorn Steakhouse today for sale.
4.4 cap rate at 6,800,000 with 1% annual increases. This stuff is just frankly nuts.
Can you imagine buying debt with short term 5 year loan on these properties?? You got to sell or have to refi and the interest rates are higher.
The higher cap rate or value add gives you more flexibility on the exit.
