NNN deal on day care tenant

[Rao Mu]

I am currently looking at a day care nnn deal with 15 yrs left on lease and is corporate guaranteed. All at a cap rate of 6.5%. The nnn rent is atleast 20% less than market rent. Also, it's in a populated neighborhood of New Jersey where abundant jobs exist. Rent increases every year are capped by consumer price index. On paper, it looks like a great deal if I get 10yr loan at 4.25-4.5, I would get cash on cash at 10-11% with 25% down on 2 million dollar purchase price. I haven't seen the lease yet, but the fact that leasing rate is less than market rent makes the deal juicy. Need some expert opinions on this. 

[Joel Owens]

I assume you are looking at a flyer or OM. I would have to read the lease as that is where the "rubber meets the road".

Market rates are not at 4.25 to 4.5 for 10 year fixed money. Those are pre-Trump election rates. Add about 50 basis points on the loan for 10 year money.