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Steve Dye
  • Investor
  • Eau Claire, WI
14
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25
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Cap Rates on Odd Retail Properties - Greenhouse

Steve Dye
  • Investor
  • Eau Claire, WI
Posted

I'm looking at buying a small business and like to split the real estate and the business during the valuation process.  For the real estate side buyer and seller agree that a triple net rent of $45k a year is a good starting point.  - Long lease as it would be hard to refill.  (10-20yr)

I don't want to be unreasonable on the valuation but in our small market (100,000 people) it would seem like a high cap rate makes sense.  Industrial in Minneapolis and Chicago seems like 8% or so, by the time I adjust for location and uniqueness I\m in the 10 to 11% range.  The difference between 10 and 11 is pretty high.  Plus the limited rental options make 11 seem low a little.  Just not sure.

Anyone with any experience with odd properties?

Thanks!!!! 

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