NNN long term risk evaluation, Initial lease w/renewals
I'm looking at a NNN retail lease Investment in which it appears the initial term will be up in three years with two additional five-year options to renew, each with a 10% rent increase. My first concern is that although they are advertising it as a NNN, in the offering it says roof and building are the landlord's responsibility. The NOI and cap rate they are advertising do not reflect any expenses! I'll have to dig into That! But how does one evaluate or make sure the current tenants have intentions to renew. Also if the area is good for retail, do these properties typically appreciate because of a good location or depreciate the closer you get to the end of the lease term? I'm familiar with the area and think this is could be a good deal. With such fierce competition out there for passive investments with a good cap rate, do people make offers below asking price on these or do they typically sell for asking price?