Hello Experienced Ones:
Has anyone analyzed these dollar stores which are NN properties with Cap of 8% or less. The prices are < 1 Mil.
These companies are BBB rated. (Good from investmentpoint of view) Some of them have 10% escalation clause every 5 year on a 10 year lease with 2 five year options. The structure and roof are the owners responsibility. Taxes, maintenance etc are paid by the company.
Example:
Price : $ 775,000
NN : 62,000
Even with 25% down the numbers do'nt work. The other
problem I see is that most of them with this Cap rate are located in small markets. Some of the towns are with decreasing population (-2%over 10 years). So even with a small hiccupin the economy, being a stand alone blgd. it could become a dark property in no time! THe equity growth is not like East or West Coast properties, but may be 1 to 2 % if not stagnant.
The question : Who is investing in these structures and how are they making it a profitable investment? I must be missing something. All comments/suggestions are welcome. Please educate me
I put this topic in 'deals in progress' forum by mistake. Hope this is the right one and will have some in depth discussion.