All Forum Posts by: Rud Sev

It's a little easier to analyze NNN properties, but there are nuances and questions you need to ask. I have a 72 point checklist I can share with you if you PM me. Personally I wouldn't invest in these in today's market as you can get higher rates of return elsewhere like mortgage notes that are even more passive and have no capital calls. The biggest thing you need to analyze is how easy is it to release this space if the the tenant leaves. Major corporation's leave all the time so be prepared!

I'd suggest narrowing down a bit. Marketing material from commercial brokers in all 50 states, for all sorts of NNN, isn't useful, and you aren't going to really get insights until you narrow your focus a bit.

Starbuck is a nice easy thing to watch b/c they are all over and, since Americans have largely replaced their trans fat addition (McDonalds, Burger King) with a sugary caffeine addition (Starbucks), it's likely going to do well for a few decades. 

A Starbucks building in a suburban nice area in California is going to go for a 5% cap rate, and in Kentucky an otherwise identical building with a NNN Starbucks tenant is at a 6% cap rate. Bam, now I can in fact somewhat speak "in general," and I can say that with a fair degree of confidence BECAUSE I've zoomed into that one thing. Don't ask me about Dutch Brothers or Burger King or Target, as soon as that is in play, my "in general" commentary is right out the window. (If curious, my residential real estate investor clients from 10 years ago [you can find my 10 year old bigger pockets dot com posts :], at the time buying up 2-4 unit properties, a lot of them are now done with the 'human' tenants and want to 1031 into something that is ACTUALLY passive, so yes Starbucks comes up, thus I watch it).

In my case I zoomed all the way into a specific brand (which then allows me to make very sweeping generalizations across an entire state -- but still not the entire country), I'm not suggesting you do that, but SOME of the variables need to be narrowed down, before you can gain any useful insights. 

 There really isn't a "general caprate" for an entire area.  you'd have to break it down to some like for like comparisons to come up with a more "general caprate for a specific asset class" or something like that.  

call me old fashion but if you are sifting through deals, the number 1 thing I look at is market dynamics. I'm not even considering a deal if its not in the specific market that meets my requirements for demographics and psychographic profiling. 

- Then the next filter is physical property attributes with regard to its placement in the market, entrances, and exits, visibility etc.   

- Then I start looking at prices and returns etc.

This is why I like to go in that order, the least of which is that it helps sift through a lot of crap quickly.

 The physical asset you are going after is going to dictate much of what "fair pricing"is going to me.  Same logic applies here as it does to your previous experience, there's just simply an added layer of the income produced by the property.  But ultimately all tenants leave, all debt comes due, and you're going to need to backfill it, so who is that, what pool of tenants could you consider? is significant retrofit needed?

- Generally if you are getting triple net deals from big name brokers the deals are going to be overpriced. The CBRE's of the world are notorious for overpricing their Broker opinions of value in my experience. 

- If you are looking for help/input like I said we specialize in market and site selection, so if you haven't don't that yet, we've got some data backed approaches that might be interesting to you.   its mostly focused on retail, but the inputs are infinitely adjustable for whatever asset you are going after.