I am a new commercial real estate investor. I have never owned any commercial real estate before. I have two residential real estate rentals both locally. This potential new property is out of state, which makes me a bit nervous. I would appreciate your feedback. My spouse doesn't mind going forward with possibly tying up the property and doing due diligence.
This is what my commercial real estate broker wrote to me.
"This is a good investment for you to look at. This is a supermarket. Supermarkets are very stable businesses. It is NNN so you don't have to do anything - just receive the rent checks. The tenant has over locations across the nation - so is a very established tenant. The rent the tenant is paying is super low, which makes it very secure because the tenant can't move anywhere else to get lower rent and if they ever leave, you know you can get higher rent so there is a lot of potential upside.
Corporately Guaranteed Supermarket, Out of State
- Corporately guaranteed supermarket
- Very low rent - $0.50/SF, which means the tenant is very unlikely to ever leave, making the asset very safe. If they ever do leave, rent for a new tenant would be a lot higher so there is a lot of upside potential.
- Dense area with over 200k residents within a 3-mile radius
- Busy traffic counts of over 20k cars per day - makes it a desirable location for any tenant and guarantees business for the tenant
- 6.75% cap rate with 6yrs remaining on lease and 5-5yr opt
- Surrounded by a combined 4 elementary and middle schools - makes it a desirable location for any tenant and guarantees business for the tenant
- Just note, this is a NNN lease with tenant paying all taxes, insurance and interior maintenance. Landlord is responsible for structure and roof. Roof has a warranty for another 16 years, so really only the structure. The property was completely renovated in 2017 so you still want to inspect it but it should be in good condition."
