Starting Out in the STNL Space

[Earl Sargent]

Good afternoon everyone!

I've been following commercial real estate for the past few years and I've developed a personal preference for the STNL space. I'm looking to start syndicating deals with the end goal of a private equity fund specializing in STNL and I'd like to get some advanced knowledge and insight into the space. I've been trolling some other posts about NNN deals and I'd like to get a general consensus around recommended fund size. The goal of the deal is to provide cash flow rather than a huge return on exit.

For a starter boutique fund, I was thinking about capping at 5 million, doing a 7% pref with an 80/20 split. Purely NNN. Provided that I can get a decent interest rate with 65-70% LTV, does that seem like a decent place to start? I'm aiming for properties with corporate guarantees like DG (Dollar General) and maybe a CVS/WG (Walgreens) and caps no lower than 5%. I'm looking at long term financing as I think I will get the best rates/approval chances and exits after about 7 years. From what I've researched, properties tend to have better sale value/chances at a sale if they're coming up on a rent increase. Does the same apply for leases coming up on option periods with rent increases?

I've seen posts that use larger funds as an example i.e. 30MM+. Is 5MM-10MM a decent start or should I be more ambitious with funding requests to provide decent cash flow?

Thanks in advance!