All Forum Posts by: Michael Behrens

@David Ripplinger Thanks David. Have you participated in either of those strategies? Broad question, but what kind of money would it take to become a private lender?

@Jeff Kehl Congrats on putting that deal under contract. At the end of the day, I agree that location really does matter— sounds like you weighed the risks, complications and alternatives well!

Hey Jonathan,

I think it would depend heavily on your time horizon, risk tolerance and other assets you currently owned. If you didn't have a heavy appetite for risk, you could invest in triple net lease real estate in addition to federal and state tax free municipal bonds (munis), which would pay stable solid returns for years to come too.

Let’s say you’re a passive real estate investor.

You do a cash out refi on your home and now you’ve unlocked 300-400k to park in an investment property, or multiple deals.

Curious to hear best advice from investors who’ve managed to multiply their wealth using passive real estate strategies, perhaps from a similar scenario?

@Joel Owens Thanks for your thorough and thoughtful reply! I appreciate you taking the time to respond to the thread I started.

I like Dollar General’s business model on the whole and think they have a competitive advantage with smaller format stores in smaller towns across the country. I believe they’re here to stay, at least in the foreseeable future, and might even prove better insulated from much of their competition during a recession. I saw a stat recently that 75% of the population in the U.S. is within five minutes of one and they continue to add stores by the clip it seems.

That said, from a triple net real estate perspective, I share the concern that people are lured by the high buy-in cap rates and corporate guaranty on the lease, without factoring in the possibility of higher interest rates in the long term, lack of rental increases to counter cost of living increases, and a changing market over a 15 year lease term let's say. We all know that purchasing power declines over time and today's money won't be the same in 15 years when that lease is up. Stable, predictable cash flow today with purchasing power risk tomorrow? So, if you can't force appreciation up or increase NOI, when is a good time to bail?

In your experience, with clients who own dollar stores for example, how long into the life of the primary lease typically until the landlord is notified the tenant isn’t going to renew in the option period?

Two part question. With uncertainty around interest rates, market forces beyond our control and an ever changing retail landscape, what is the best advice on formulating an exit strategy for NNN investments today given a long lease and long time horizon?

On the flip side, what's the best exit strategy for NNN investors who have 5-7 years left on the primary lease, are uncertain if the tenant will exercise the renewal option and the tenant doesn't report rent to sales?

Dollar General stores, as far as I know, don’t report rent to sales today.

@Greg Dickerson. Hello Greg. Thanks for responding. I think syndication is a really fascinating business and I’m curious to learn more. I see the opportunity to leverage and scale going this route.

Have you seen NNN syndications work on a smaller scale? If so, how does the NNN syndicator/ sponsor justify fees on a plain vanilla NNN transaction with let's say 3 or 4 investors?

@Jeff Kehl. Hello Jeff. I happen to agree with you wholeheartedly on this point. I'm looking for guidance from someone who's had experience syndicating NNN specifically to clearly indicate where the sponsor can add that value to a plain vanilla NNN transaction above, and justify fees beyond sourcing the deal, providing access to a professional team (legal counsel) etc. and getting a competitive rate on debt structure.

As you know it's hard to force significant appreciation on NNN product since the trade off is typically stable cash flow from long term leases with small rental escalation clauses along the way.

What if the syndication was larger? Could the location of the asset be a justification?

Curious to know your opinion?

Thanks,

Mike

Thank you Jaysen!  Active versus passive seems to be the big key from what you've said, along with many other details!

I own and invest in NNN. Recently I've been approached by several people interested in acquiring NNN properties as capital partners because of their stable cash flow, predictable returns and the confidence of longer term leases by credit tenants.

Does anyone out there successfully syndicate NNN properties? How to get started? If so, is this a viable and profitable way to syndicate? Where does the syndicator "add value" in this scenario? Thank you for your feedback!