All Forum Posts by: Bob Willis

Hey @Greg Larson - Love that you sold your Chicago house and bought an RV.

For a duplex, those numbers don't seem horrible.  Assuming your numbers are in line it's unlikely anyone else will come along to pay their asking price.  I'd encourage you to keep following up.

Also, one of my favorite sayings is "some of the best deals are the ones we pass on" so stick to your numbers!

The biggest question you will have is what happens when this store goes belly up at the end of the lease.  Most people don't think that far ahead, but it does happen.  I've seen Walgreens, Starbucks, Target etc. close locations.  I even had a famous Daves Restaurant in my portfolio that left the location so I know that pain.  During the last recession and covid some locations stop paying the landlord all together to force a buyout or negotiation.  It's just life and that's okay, but there is a series of checks you need to do when evaluation a property from a conservative lense.  I"m happy to help or share that with you.  

Bob it's all about your goals. There is the investment itself and what cash that might throw off but could be a terrible fit for your investment game plan.

My clients that tend to buy NNN properties already make a lot per year 500k plus into the millions from their corporate job, doctor, other businesses they own, more active real estate, etc.

What I want people to hear over and over is that NNN single tenant absolute net lease with an investment grade credit is PASSIVE investing. Think of stocks but more stable with real estate appreciation potential and tax benefits.

When you get to where you have million, tens of millions, hundreds of millions of net worth you no longer have to play in the ACTIVE investment space and work for yield with your investment.

Example a Dollar General that trades at a 5.5 cap rate the current down payment might be 35% down and debt at 4.4 to 4.5% for 25 to 30 year amortization fixed for 10 years. Most DG's are flat until the option periods it depends on what vintage the leases were down in for years or decades ago and how sophisticated the developer was when they built the property. Some newer developers less experienced get taken to the cleaners on lease structure by these national tenants. They later find out the buyer when they want to sell does not like items in the lease that affects now what a buyer will pay for the property with cap rate and returns.

You might be hitting 5% cash on cash return off of the down payment before mortgage paydown and any tax benefits. Again if someone is making millions and wants to park money into a typical high safety and more passive asset then a DG might be a fit. You live local so might be a fit for you to take some liquid and diversify the portfolio as you age and might not want to work as much on your assets.

I am 47 years old myself and know I do not like owning active type of assets.

Example I can buy a pharmacy with a few years left paying on the lease for a 10 cap or better and then collect the passive money while I wait to negotiate and extension with the NNN tenant or place in another tenant at same or higher rents with a longer term lease and achieve cap rate compression and value add.

I got away from residential decades ago. Commercial investors often have very deep pockets so tend to be lots of buyers when you go to sell not matter the cycle (if you have the right location and the asset).

Check if this DG being built is the Dollar Plus format, upgraded construction or not, and on well or sewer. There are certificates per the lease that transfer responsibility from developer (owner) when building out to DG (tenant). Sometimes with well systems they do not have the weather to test them properly and trouble buying the property with delays.  

Read this book before you do anything! Short-Term Rental, Long-Term Wealth: Your Guide to Analyzing, Buying, and Managing Vacation Properties https://a.co/d/2ToG7ac

Quote from @Bob Willis:

Quote from @John Underwood:

Vrbo has been hands down better than anything else for me on a true vacation rental.

Hey @John Underwood why do you think that is, and is there some specific differentiator (type of guest, price paid, etc) you like?

Thanks.

I think I can speak for John when I say that VRBO (generally) has a better quality of guests. They tend to be older, have more money and leave the places cleaner.

The difference in the 2 platforms is also distinct. AIR tends to be authoritarian and corporate (in the bad way :-) and their customer support is a joke (english speakers are non-existent)

VRBO can be a bit more expensive, but you can purchase the yearly plan and make up for that....