Need help analyzing a CAP rate for a commercial property
I own 25 Subway franchises. One of the 5 unit strip malls that we rent in is for sale. I met with the landlord today to discuss. It's a NNN lease and I know the rents for all the units. 1 vacant as of recent but I expect it filled soon. I also know the property taxes, insurance, and CAM amounts since it's NNN. 3 long term tenants (including my Subway), 1 shorter term (2 years), and 1 empty unit but it'll prob be leased soon: Pizza shop with all FF&E.
Can someone point me towards a good tool to analyze the CAP rate and a good starting offer?
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Cap Rate is an easy "back of the napkin" metric to analyze the deal. But it really doesn't provide the full picture. If all leases are true NNN, you can calculate the cap rate by adding up all rents and divide that by the purchase price. There are too many factors to consider to give you an accurate estimate, but assuming a good location, no major cap ex..probably want to be somewhere around an 8 cap.