Posted by george on August 26, 2006 at 01:00:31:
I agree. You won’t find triple net properties with credit quality tenants, with many years left on the lease, to have caps below 8, just about anywhere in the country. In some parts of the country, like California, you often see caps below 6 for the most desirable properties.
6.5% cap rate? Is it worth it? - Posted by john
Posted by john on August 22, 2006 at 22:48:38:
I am looking at a major retail triplnet property with a 6.5% cap rate. Its in an area of growth, so if feel good about the long term appreciation possibilities. Is it worth it to start this low on this particular cap rate? The rents do go up every 5 years, but I fear when I sell it that I won’t be offer too much of an appreciated price, because my cap rate hasn’t grown that much. What are your thoughts?
Re: 6.5% cap rate? Is it worth it? - Posted by Don Dion
Posted by Don Dion on August 25, 2006 at 15:02:21:
Just because a seller asks for a selling price that pegs his property at a 6.5% cap does not mean you have to offer him his asking price. Take his figures and plug them into your system lowering the offering price till it meets the market area cap rate which by the posts seems to be in the 8% range for your offer.
Re: 6.5% cap rate? Is it worth it? - Posted by SteveD(TX)
Posted by SteveD(TX) on August 25, 2006 at 14:33:53:
In my area, a 6.5% cap would reflect the best of the best, and is about the lowest acceptable rate that an investor would accept. Average is 8-9% for triple net retail. You need to consider how long you intend to hold the property, the value of the reversion and what kind of overall yield that you expect.
Wait for interest rates to go up - Posted by MikeW
Posted by MikeW on August 24, 2006 at 22:24:29:
Rising interest rates will push up cap rates. This argues for waiting. I really don’t know why rates are still as low as they are. By now I figured 10 year treasuries would be >6%.
Re: 6.5% cap rate? Is it worth it? - Posted by john
Posted by john on August 24, 2006 at 08:34:40:
My feeling is that it’s not the risk factor that is keeping rates low, it’s the overpriced market.
Re: 6.5% cap rate? Is it worth it? - Posted by George
Posted by George on August 23, 2006 at 18:17:35:
6.5 % is the going cap rate for quality triple net properties. If you want a higher cap, you usually have to buy properties with greater risks. Triple net properties have great advantages in producing a hassle-free investment with, depending on the credit quality of the tenant, a very reliable source of income over a long period of time. So basically the choice comes down to trading return for risk just like every other investment out there.
Re: 6.5% cap rate? Is it worth it? - Posted by john
Posted by john on August 25, 2006 at 16:27:46:
all of the corporate chains like wall greens, wendys etc. have cap rates lower than 7.75% at least on the eastern seaboard. I’m guessing demand is still high on these type of properties because everyone is trying to trade up with all of their equity they have earned on previous smaller properties.