All Forum Posts by: Dan Cahill

Seems like your typical NNN lease deal. What is the access like? What is the traffic count? Is there an anchor nearby like a grocery store. Is the area growing? Is their competition nearby. Are there clauses in the lease that prevent competition from coming into the center if run by an association. What is unique about this property that makes it attractive. The biggest questions is if the tenant exits their lease, how easy is it to rent that space.

Hey Dan, seems like a somewhat solid deal from what you've posted.  My other questions would be, does the space have any limitations on it?  would it make it difficult to place a different retailer in there?  are there any encumbrances on the property that would prevent certain tenants from leasing there? Basically just curious what the exit or pivot plan would be if the pet store goes out of business tomorrow?

 Mediocre location says it all

I've brokered medical offices and been on the investment side. Aside from just looking at the asset itself, dig into the local competitive market for that particular type of asset.

What are comp rents going for? How long have competitive units been on market? Does the subject property have any competitive advantages? What's the quality of the subject property vs. the comp set? Have in place rents escalated past fair market? How much deferred maintenance is there? How dated are the suites? How much will it take to renovate the units/common areas if needed? Are any of the tenants close to retirement with old suites that require a ton of TIs and lease up costs to turn over?

The better you understand both how the subject property operates as well as how it fits into the local market, the more precise your underwrite will be and the less likely you'll be to have a nasty surprise.

Also consider where interest rates are heading and what market caps are doing. Cap rates have not meaningfully decompressed to take into account higher borrowing costs. The catch up we believe will happen but won't be immediate until interest rates cool off demand.

Dan I am interested in this as well. Looks to me like a lot of these types of properties dont have a hot demand based on price and return. I think these would be good properties to add to a growing portfolio to add diversity. Commercial properties can sit for longer periods just because there are not as many people pursuing them. Definitely do some more digging but this could be a good opportunity to pick up a nice stable property.  

 Even if it trades at $800k, I wouldn't worry about a frothy market. I was watching multi family prices in 2017 go up. I didn't buy back then because I thought it was frothy. Each successive cap rate and trade has the buyers laughing all the way to the bank!

Correction? 2 million dollar NNN is like a 200k house. Huge buyer pools and most pay all cash. Properties can get 12 offers within 48hrs.

I like this deal at a 5.5 cap.  Some of the bigger players can buy better assets at 4.75% valuation so they could pass on this one.  I would make an offer, just make sure you put enough cash down to make it cash flow as interest rates are going up!!  My portfolio is full of these kinds of deals, but that's just because I'm conservative and patient.