NNN Lease Property Offer?

[Julian Rodriguez]

I have a NNN Lease property that is being offered to me at 2.5 Million in New York. It is a 12 unit property and the existing lease is for 5 years with the option on the tenant to renew after the 5 years for an additional 5 years. The seller is selling the property based on a 9% cap rate, all of the expenses will be covered by the tenant as stated in the lease. I have never purchase a NNN Leased property so my concern is that if the tenant does not renew after the 5 years I would be stuck with a property that I overpaid for due to the inflation cause by the NNN lease.

Just to be clear, these are apartments that were converted specifically for this tenant, so it is not a commercial space that I may be able to easily rent if the tenant leaves. I would have to find this type of specific tenant in order to make it work if he leaves.

So my question is what is a fair offer I could make to the owner taking all of that into consideration?