All Forum Posts by: Kevin P.

Thanks Derek. I do plan on getting bank financing. The risk  seems low at first glance as the triple net side of the building is a dentist office owned by a corporate dental company with 7 years remaining and two 10 year options. Just that side alone covers expenses and leaves some cash flow the other side is a nail salon and is all upside but frankly I could see that one going away. You bring up a good point though if the dentist office disappears for some reason this could spell trouble. If I were to buy this I think I need cap rate of 10% but I just don’t know if that is asking too much.. I guess I can lower my offer to what I want and then if they don’t take it ..walk away. The other option is to bake in a person guarantee which could alleviate some risk as well.

Thanks!

Kevin

Background: This week I'm planning on putting an offer down on my first commercial property, I only own one other rental (residential).

1. The asking price is $370,000, it was recently sold 2 years ago for $350,000. The selling company is an LLC for the corporate Tenant, they are looking to move assets off their books.

2. Trying to get myself out of paralysis mode, I think this is a good deal but I am worried about the corporate tenant leaving, they do have 2 10 year options ahead of them and 7 years remaining on their current lease. The business is has been there for 20 eyars, so my worries may just be that... ugh.. 

Question: Any advice on what to look for regarding cap rate for commercial property w/ partial NNN lease? I've heard 5%, 8%, 10%, 12%...