Buying Long Term NNN Leases

[Justin S.]

Hey everyone. I currently own a lot of single family homes, a couple apartment buildings, and one commercial strip mall. I really like the commercial side, so I have been trying to find more of these kinds of deals. This is not a flip, fix, or anything that I'm used to. Simply buying a building that's already leased to a tenant.

It's a standalone restaurant building that has been in place for five years. It is in a great location, in a Wal-Mart parking lot in a big town. The building, parking lot, area, is by far one of the best areas in this town.

The restaurant is a large national chain, and the franchisee owns nearly 100 of these restaurants. They are very profitable, and have been in business for 40 years. The purchase price of the building is 1.33 million, and the NNN lease amount is $105,000, making this property approximately a 7.88 CAP. The current lease goes for 10 more years including 1% raises every year, and there are 5 additional lease options on the property all at 1% per year.

This kind of deal is very attractive to me because it seems very consistent. The perks of NNN are nice, as that is what my current commercial property is right now.

Has anyone worked on these kinds of properties? The cash on cash return seems good, and the mortgage pay down is very nice as well. If I did not take income from this property, it could be paid off in 13 - 14 years.

I would love to know everyone's opinions. Thanks!