Would you take a 6 CAP triple net or 6 CAP MF?

Question

Mike Dymski · Answer

The sweet spot can be a property that is a class lower than the market, not vice versa.  A B class property in a C class market will not attract B class tenants or rents.

Kris Patel · Answer

NNN is headache free. see if u can get 25 yrs lease, get fux rate n enjoy for 25 yrs. I did it with Walgreens.

Ronald Filian · Answer

My experience and opinions - I have dealt with enough tenants in FL. ( just moved from stuart / palm beach area ) in my own portfolio. I would prefer to invest in the stand alone NNN.  However, I would also look at the zoning of this property (highest and best use).   If food / fast food / drive thru - the brand needs to go dark and buy out of lease or file's BK - is there a replacement brand waiting in the wings.  I like Jax. growing area and new ports for panama canal.  Brevard not so much as the lost jobs in the space coast. Tampa big city and neighborhoods change quickly.  Areas nearby that are still hidden gems - The Villages and Clermont.  good luck.

Account Closed · Answer

It all depends on the cash flow. Which one gives you better cash flow?

Luke Grogan · Answer

@Marc C. Hey Marc, not sure I understand the question. The BET cashflow (before tax?) is $4,700/mo which makes it a 6 CAP on purchase price. I'm assuming "a couple hundred per month" in expenses for NNN, but I'm just at the start of really doing any DD and this is the first commercial property I'm digging into. Without getting it under contract, they won't share tax filings or monthly cashflow/expenses or the lease terms. I understand it, but just not sure I want to put it under contract until I know a little more about NNN and if it isn't he best way for relatively low involvement, protected cash flow.

I'm staying away from fundrise and REITs at the moment. I can also get solid, 7%+ returns with a couple of oil and gas companies and bet on rising energy prices, but I'm separating stocks, REITs, and notes from real assets that I'm purchasing. I've got one good pool of capital to put to work for my second round of major purchases and trying to make sure I am looking at it correctly for cashflow and moderate downside risk.

Ian Ippolito · Answer

@Marc C., You're right that there are crowdfunding deals paying 8%+ returns. But I wouldn't use Fundrise as an example.If you read the prospectus on that Fundrise REIT, you'll see that the actual investments in it are not actually paying you 11%. The company achieves the 11% guarantee by artificially pumping money into the fund to pay out to investors. There's no such thing as free money: after the 2 years are up, you will be paying for the pumped up returns via your investor dilution.

Marc C. · Answer

Whats the bet cash flow on the NNN property? They are usually in the 5-6% range, vs. 10℅ for MF.

The Fundrise eREIT is paying me 11% with no hassles. The Crowdfunding sites have plenty of deals paying 8℅ preferred returns.

Would you take a 6 CAP triple net or 6 CAP MF?

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