Underwriting NNN Deals

[Paul T.]

Hello all,

I'd like some input and feedback on underwriting NNN deals; is it simply subtracting debt service(s) from NOI over the course of the lease? (Of course adding rent bumps, etc)

I know each lease is different and landlords may cover additional expenses with NNN such as the parking lot, but as a first-pass, "quick and dirty", is this a good way to start? Am I missing a key component?

[Ronald Rohde]

It is that simple. You are calculating the projected (discounted) cash flow vs the risk of tenant default vs time needed to manage the property (Return on equity).

Coming up with your own NOI is an art as much as a science. I only invest in NNN industrial, currently have 100,000 sq ft in DFW, just closed on a 5.5 acre site in July...