Triple net - With a gas station

[Mason Moran]

Hello all!

I have been presented with an opportunity to invest in a commercial property, a triple net property with 6 units. 
Currently 3/6 are leased. 2 of the 3 leases end this year, another one it leased until 2028. The asking price is 1.65 million. I always thought that valuating a commercial property was (NOI/CAP rate) - cost to stabilize. Currently the income is about 67k a year / .08 (8% cap rate) - 60,000 for a year to stabilize (worse case scenario). This has the property at about 782,500. Which is almost a million less than asking. Also, this doesn't take into consideration that the property will be 5/6 vacant in the next coming year.

Also, the property comes with a gas station with 6 pumps and currently vacant. What should one look out for when purchasing a property with a gas station on it? 

[Greg Dickerson]

Originally posted by @Mason Moran:

Hello all!

I have been presented with an opportunity to invest in a commercial property, a triple net property with 6 units. 
Currently 3/6 are leased. 2 of the 3 leases end this year, another one it leased until 2028. The asking price is 1.65 million. I always thought that valuating a commercial property was (NOI/CAP rate) - cost to stabilize. Currently the income is about 67k a year / .08 (8% cap rate) - 60,000 for a year to stabilize (worse case scenario). This has the property at about 782,500. Which is almost a million less than asking. Also, this doesn't take into consideration that the property will be 5/6 vacant in the next coming year.

Also, the property comes with a gas station with 6 pumps and currently vacant. What should one look out for when purchasing a property with a gas station on it? 

A seller can ask whatever they want. Commercial properties are typically valued on NOI and CAP rate will be reflective of area, condition etc.

There’s a lot to know and look out for on the gas station. First is environmental, condition and ownership of the pumps, canopy and any other equipment. If pimps are owned by the oil company they will want a contract so you need a consultant to help you as they are tricky.