It seems that I have 2 opportunities here. One is with a short sale condo 2 bed 1 bath at $100,000 rents for $1,200 which I'm waiting on the sellers attorney or maybe my agent. The 2nd one is a triple net grocery store selling for $150,000 with rental income of $1,500 a month with the rental tenant paying half the taxes. Which one sounds good???????
2 things I'm looking for if one doesn't fall through is a hard money loan for one or the other. Or a partner for one or the other...any input would be appreciated
Completely depends on what your financing and terms are. Without knowing what your monthly payments are on one or both, how could you possibly answer the question on what's the better deal?
Off hand neither looks like a very good deal without more information. The triple net grocery store looks the best, but if they are only paying half the taxes it would not be a triple net. I do not know your market so maybe those are considered good deals where you are at.
Hard money is short term. It might allow you to acquire a junky property, fix it, rent it, then refi. It doesn't seem applicable to either of these situations. And you will need to be able to refi and pay off the HML. Why not just look at bank financing right up front? You will need cash for down payment and reserves.
With NNN properties the trick is to get financing at a rate that's lower than the cap rate on the property. This doesn't sound like a real triple net deal, though, if the landlord still pays some of the taxes. The thing that's always kept me away from such deals is that the tenant can go out of business. Then you're stuck with a hard to rent hulk of a building. These deals are highly dependent on the creditworthiness of the tenant. Perhaps @Joel Owens has more insights.
Jon Holdman, Flying Phoenix LLC
Must be a mom and pop grocery store for 150,000.
It's not NNN if the landlord has to pay some taxes.
Large grocery stores run from usually 3 million to 10 million in price and they can be by themselves or have a strip center included.
The grocery store you will likely have higher due diligence and closing costs then the condo.
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