Introduction to NNN Lease Commercial Real Estate Investing

www.HasslefreeCashflowInvesting.com

Intro to NNN Investing

Professional InvestorDavid CampbellFounder of Hassle-Free Cashflow [email protected](866) 931-9149 Ext. 1

http://www.HasslefreeCashflowInvesting.com


mailto:[email protected]



Today’s VIPs(very important points)

• CAP = NOI / PRICE

• How to make money in commercial real estate

• Spotting a good deal

• Case study




Disclaimer

This is NOT legal, tax or investment advice.

No agency created.

Educational only. Consult your advisor.




Profit(Money + Time + Hassle)ROI =

We all want more profit with less invested




Real Estate Profit Centers•Cash throw off (aka cashflow)•Equity growth from loan amortization•Tax savings from depreciation•Equity growth from appreciation (CAP Compression)

•Equity growth from rent increases (income/CAP)

•Arbitrage (CAP > Interest Rate)•Equity growth from Lease Renewal•Equity growth from increase in Tenant’s credit•Forced Equity from change of use /development




Cash Throw Off from

Rental Income




Equity growth from loan amortization




Tax savings from depreciation




Equity growth from appreciation

(CAP Rate Compression)




CAP = NOI / Price

10 CAP = $10,000 NOI / $100,000 PRICE




NOIPRICECAP =

10 CAP = $10,000 NOI / $100,000 PRICEAs a buyer we want a HIGH CAP as a seller we want a LOW CAP




NOICAPPRICE =

$100,000 PRICE = $10,000 NOI / 10 CAP

As a buyer we want a HIGH CAP as a seller we want a LOW CAP




NOICAPPRICE =

$125,000 PRICE = $10,000 NOI / 8 CAP

As a buyer we want a HIGH CAP as a seller we want a LOW CAP




Equity growth from rent increases

(income/CAP)




NOICAPPRICE =

$125,000 PRICE = $12,500 NOI / 10 CAP

As a seller we want more NOI




Arbitrage

CAP Rate > Interest Rate

8% RETURN - 5% COS T of BORROWING = 3% PROFIT ON BANK’S MONEY




Equity growth from Lease Renewal

Longer term lease = lower CAP




Equity growth from increase in Tenant’s credit

Stronger tenant = lower CAP




Forced Equity from improved tenancyor development

Higher NOI = Higher PRICE




Evaluating A NNN




Durability of Income

Lease Term

Tenant & industry strength

Property attributes

for expensesDemographicsfor releasingUpside

potential

Releasing income potential

Cost oftenant

improvements

Financingavailability




Durability of Incomedetermines

Market CAP



“Net Leased Family Dollar”Chattanooga, TN

High Visibility Location Strong Traffic Counts Net Leased Asset - Minimal Owner Responsibility

Investment Grade Tenant Built In Rental Increases Lease Expiration - 1/31/2020

Property Information

Family Dollar - Chattanooga

Chattanooga is located in the heart of the southeast, centrally located between other major cities suchas Nashville, Huntsville, Birmingham, Atlanta, Knoxville, Ashville, Columbia, and Charlotte.

Geographic Information



Purchase Price: $678,000

Gross Rent: $56,000

Vacancy $0

Management $0

Property Taxes $0

Insurance $0

Maintenance -$1000

HOA / Misc $0

Net Operating Income $55000

CAP Rate 8.11%

Financial Information


Family Dollar Stock Price

Purchase Price $678,000

Down Payment 15%

Down Payment $101,700

Loan $576,300

Closing Costs $7,000

Total Cash Invested $108,700Interest Rate 4.75%

Loan Term 25 years

Monthly Payment -$3865.40

NOI $4,583.33

Cashflow $717.93

Cash Throw Off 7.9%

Financing Information


How can I make money with this property ?

• Rental income: creates monthly spendable cashflow

• High leverage: 85% LTV at historically low fixed rates

• Commercial Loan Amortization: tenant’s pay down mortgage

• Tax Benefits: depreciation

• Built in rent increases force equity

• CAP Rate compression

• SIMPLICITY!!!

• Resume builder / syndication opportunity


NN Lease Post Office“mail box money”

Leased till 1/31/17 Highest producing post office in county

Located in central business area of rural county

Leased with USPS since 1987 Built in 1987 - Build to Suit 4182 sf building on 1.11 acres 36 Parking Spaces Landlord pay roof & insurance New roof in 2009 with warranty

Property Information

The USPS employs over 574,000 workers and operates over 218,000 vehicles.

The USPS is the operator of the largest vehicle fleet in the world.

The USPS traces its roots to 1775 during the Second Continental Congress, where Benjamin Franklin was appointed the first postmaster general.

The USPS is legally obligated to serve all Americans, regardless of geography, at uniform price and quality.

Will the post office go out of business?

Purchase Price: $525000

Gross Rent: $51000

Vacancy $0

Management $0

Property Taxes $0

Insurance -$1,059

Maintenance -$300

HOA / Misc $0

Net Operating Income $49641

CAP Rate 9.46%

Financial Information

$12.21 /sf NN

Purchase Price $525000

Down Payment 25%

Down Payment $131250

Loan $393750

Closing Costs $6,000

Total Cash Invested $137,250Interest Rate 5.5%

Loan Term 25 years

Monthly Payment -$2418

NOI $4,137

Cashflow $1719

Cash Throw Off 15.0%

Financing Information

How can I make money with this property ?

• Rental income: creates monthly spendable cashflow

• Commercial Financing: 75% LTV at historically low fixed rates

• Loan Amortization: tenant’s pay down mortgage

• Tax Benefits: depreciation over 39 years

• Re-use as medical, professional office, local government, etc.

• Substantial CAP Rate compression upon renewal of lease or stability of USPS

• Syndication opportunity


If you have interest in acquiring income property, please send an email to

[email protected]

and we’ll schedule a free consultation

Professional InvestorDavid CampbellFounder of Hassle-Free Cashflow [email protected](866) 931-9149 Ext. 1





