NNN Property Advice please

[Cory Asrilant]

Hi Everyone. I'm looking for someone with experience in owning NNN Properties. Currently have an apartment building, but looking into getting into NNN Properties. Really looking for advice and would love to chat with someone experienced. Thank you.

[Joel Owens]

The 45 day ID period starts from time you sell and close on your relinquished property unless you are doing a different type of exchange.

Most retail properties if single tenant net lease requires 30 to 35% down at the cap rates those are selling at these days. This cap rates range in about 6 to 6.5 for quality areas and tenants. If you are talking Starbucks, Chick Fil A, Mcdonalds then 4 to 5.5 cap. Those need about 40 to 50% down at those levels.

From STNL you move to the 2 to 3 unit centers with national tenants. Those generally run anywhere from 2 to 5 million or so in price. Then you have strip centers with a mix of national,regional, and local tenants. The cap rates tend to be highest with the strip centers at 7 to 8, then 6.5 to 7 for the 2 to 3 top national to strong regional tenants, then single tenant buildings are the lowest cap rate.

The key question is if you have additional funds to add to your 1031 exchange proceeds of 225,000 down?

Sometimes I get clients that have 700k to exchange and the perfect property comes along that they have to kick in a few hundred k more to purchase. This is generally why before a search I review each clients personal financial statement.

At 225k down you are looking at about a 700k to 800k property. Not much quality in the retail space in that range. 800k at 35% down is 280,000. For your 1031 you need to purchase at a certain level or you will get boot.

You might find a better option if you cannot put anymore funds down than the 1031 is to invest in a DST where you own part of a larger quality project you couldn't buy on your own. I don't usually recommend that route but in your range it might be an option. Better to own a quality slice of something then all of something that is mediocre because you have to stay in a certain price point.

1 million range you are looking at dollar stores, subway, title max, pizza hut, etc.

If you could throw another 100k in to be at say 1,000,000 and 350k down it opens up a little more quality.

Hope it helps.