Creative Financing Strategies for Absolute NNN Properties?

[William M.]

What possible creative strategies could you use to fund a Absolute NNN lease property for the down payment(roughly 25%), appraisal and environmental report cost, and closing cost? Could a commercial hard money or bridge loan be utilized and then refinance the property? Use of a private investor maybe? Any advice and honest suggestions are appreciated.

[Jeff Kehl]

@William M. Assuming you could do that why would you want to? Most decent NNN properties I see are priced only slightly above what I could borrow from the bank. So if you borrow 100% at 5.5% to buy a property at a 6 cap that is a very small amount of profit for the risk you take in owning the property.

And yes you could possibly do it with a syndicate or private money. But they are going to want what 8-10%? That's a blended cost of capital of around 6.4% you'd be paying to own an asset generating 6% PLUS there's the risk something goes wrong with the property.

Even when I analyze a NNN with say 25% of my money down they generally don't look like a very good deal to me. I know people assume they are a risk-free investment but look at people that owned a NNN Blockbuster a few years ago...