How to get started

[Mark Forest]

I know someone who buys buildings and rents them to restaurants like Applebee’s. How does one evaluate these investments and how would I get started? Please recommend some books. Thank you in advance.

[Joel Owens]

It sounds like you are talking about re-purposing an existing building rather than building new as a developer.

You buy for a certain basis and then turn around and find the tenant.

On sell off new Applebees are about 2 to 3 million in price with a cap in the 7's for a 15 to 20 year primary term lease and annual rent bumps of about 1.75 to 2.25 depending on who is guaranteeing the lease.

NNN investor typically has to put 25 to 30% down of the purchase price. Developer has to know their all in costs when selling. Generally they might be into the building for a 9 cap and selling at a 7 cap for the spread.