Sell commercial property for profit with long term lease

[Sunitha Alli]

Hello,

How can I sell a property with 15 year lease for a profit after 5 years?  

For example: I buy a commercial property for 1 million, NNN with a cap rate of 5% and 15 year lease. Hypothetically, after 5 years there is a real estate boom and I want to sell the property for a profit. How can I sell the property for a profit that since the cap rate of the property is fixed at 5%? If I want to sell it for 1.2 million the cap rate will come down to 3 or 4%? Why would any investor buy it?

Does it mean that on a long term lease even if there is a real estate boom I cannot cash in?   

Thank you

[Brent Coombs]

@Sunitha Alli, I take it that the rent DOES increase every year? Therefore, your commercial property IS increasing in value each year, right? ie. So long as you're not forced to sell it at a higher cap rate than you bought it, fine, right?

But if the cap rate is already as low as 5%, why would you ALREADY be interested? Safe, and sought-after location, right?

So, the same reasons might apply to cash-up investors when you want to sell at LOWER than a 5 cap! Welcome to BP...