NNN "mail-box" money

[Michael P.]

How much cash is needed for a deal?

Has anyone sold off some of their rentals to get into that space?

[Joel Owens]

For NNN you have STNL and MTNL. I look at between 500 and 1,000 a week for clients and I am very versed in the space. I have thousands of contacts in my database.

With STNL a single tenant building the key is if the lease has any rental increases so the cap rate return blends UP as the primary rent term winds down. You want to be in a position where you made cash flow off the asset all of those years and when you go to sell after resale costs at a minimum you can recover your down payment equity. It's not just the cash flow it is the tax benefits as well.

Some married couples get one partner to qualify for real estate professional status.

Some buy these and are fine making 5 to 6% to start and then go into the 7's for cash on cash.

The strip centers tend to offer better returns but you do have management. You can get in sometimes with 25% down and rental increases at 2 to 3% a year usually beat single tenant NNN which can range from flat (nothing) to 1 to 2% a year. Sometimes they block the rent where it goes up 6,8,10% every 5 years etc.

Whether you want recourse or not makes a difference. Example if you want full non-recourse I have seen rates at 5 to 5.10 and if a buyer will take full recourse some lenders are at 4.6 %. On an STNL deal at lower caps every basis point counts for return if that is important to the investor.

Some buyers could frankly give a crap about money returns they are just getting crushed on taxes. Example  I have doctor clients making 700k to 1.2 million a year doing surgeries. For them making 6% return versus 8% is secondary compared to tax write offs of owning property. So strategies and the ways investors look at things vary wildly.

SFR or multi at higher coc the investor is working harder for that yield so there is a trade off versus passive NNN and you do nothing.

100k for NNN doesn't cut it to own directly. I get this all the time except it is investors with 300k to 500k. They want to own directly but want great markets for high population, income levels, traffic counts,etc. Those areas for NNN STNL quality about 2.5 million and up so minimum on STNL need about 30% to 35% down so about 800k. If investor is accredited then I mention they can possibly invest with me as a sponsor and for the 300k to 500k investment own a slice of a larger property in an area they find high quality that they could not afford on their own.