Posted by Steve on November 20, 2008 at 18:13:07:
In Reply to: NNN Walmart with 8.5 cap rate posted by Prashant on November 19, 2008 at 23:48:46:
8.11% Cash on cash for a NNN lease is nothing to sneaze at. Put a
little more down like the institutional investors do and see more cash
flow. Or if you could manage to get a 30 year loan(unlikely), that
would make the numbers a lot more interesting.On the upside, with the 20 year loan you will be paying down the
mortgage faster and end up with substantial long term gains.Its unlikely that Walmart will go out of business anytime soon. If you
have a long term lease with them, then you will be golden. If Walmart
ever decides to close that facility, you will be stuck with a building and
losing your shirt unless you have lots of cash reserves to weather the
storm and do whatever creative thing needs to be done to sell the
property or find another tennant. Often times Walmarts are located in
small towns where if the Walmart were to go away, you'd be left with a
building of little use for anything other than perhaps a shooting range.There are pros and cons to NNN leases.