Hello, hoping somebody that is a little more familiar with the area could weigh in. I have the opportunity to invest (buy building with tenant) in one of two medical condo properties. Both have equivalent caliber tenants, with NNN leases, and similar cap rates.
Property 1 - Round Rock, TX (by the Round Rock High School/Round Rock Ave area) - $383/sqft - built 2008
Property 2 - Austin, TX (close to Slaughter Rd/Manchaca Rd) - $340/sqft - built 2015
Just based on that data which way would you lean? Specifically looking at future appreciation potential.
Personally I'd lean towards south austin with the growth that's occurring
I would really look at the businesses of single tenant leases, you're buying the creditworthiness of tenant, look at leases, do you have personal guarantys? That could be enough to sway my vote.
Thanks for the reply Ronald, and I have evaluated the creditworthiness of them. And I understand that the value is in the tenant, but I am also including the appreciation potential in my decision.
Appreciation is due to demand outstripping supply. What is the occupancy in that area for your comparable product? I can guess but its sorta wild guess without doing a thorough investigation. Is there any new product coming on the market that would be competition when the leases expire? For example, if its a family doctor place and there is zero family doctor offices nearby or are being built that could be competition then I would go with that one. No doubt. The less competition the better.