Great long term commercial investment! This property is bank owned and they’re in a hurry to get rid of it. The 'Fair Market Value' of this property is easily $1.6 Million, and they just dropped the price below $500,000. There is a long term lease out on the property, and it is a zero expense property (triple net). The property is on a main street surrounded by strong commercial properties. Just off a Freeway exit, and has a drive through. Sound too good to be true?
Now to the down turn: The lease is: $1,100/month(WAY, WAY UNDER) with a rent cap that only allow rent increases of 3-4% every 3 years(end of this year is due for an increase), they have the lease until 2030, and depending on your financing you'll be gaining a 3-5% ROI! However, I still think it is a great commercial investment!
This is still a great Commercial Investment because if the lease didn’t exist the current market value of this property is easily $1.6M. I know that the short term commercial market is giving way to some great deals right now, and that will not be the case forever. So I expect that it is very safe to assume that this property will appreciate to greater than $1.6M in the next 20.5 years. However, in my conservative approach, I only used $1.6M for the estimated sales price, and assumed you decided to sell after the lease period was over (The other option is to begin receiving fair market rent and enjoy your positive cash flow until you're ready to cash out) and I gave a 6 month time frame to finalize the sale. The range came in and on the minimum end(depending on financing terms and interest rate) you would still be over 15% ROI just in the cash out (average total long term investment is considered to be 8%)! This doesn't take into account for appreciation of the property, and there are alternative ways to finance the property that would greatly increase your return. The over 15%ROI also doesn't take into account that in the 20 years that you hold the property prior to the sale you'll be gaining only 3-5%ROI. This is a long term investment, it is safe, low maintenance and relatively worry free. This is a great property to put into a Trust, and just watch the appreciation grow!
You could arrange financial terms in which you pay a small portion of the financing every month (above and beyond the $1,100 month that the rent would cover) that will be offset in the tax benefits you will receive from owning this property to increase your total ROI. However, if you don't want the burden or hassle of managing paying the monthly fee and you would like that what the tenant pays to cover all of your obligations in the property then you'd need to bring $250,000 cash to the table. Bring more if you want a positive cash flow out of it. If the tenant defaults or vacates on the lease prior to 2030 you'll actually be in a better investment position because you'll be able to turn around and sell the investment for a much higher ROI immediately, or begin collecting fair market rents on the property, and enjoy the great positive cash flow until you're ready to cash out. Any sales price above and beyond $1.6M will mean a much higher ROI.
This is a low maintenance, long term, great investment for anyone looking to secure their trust or financial future. This will not last long so if you or someone you know is looking to secure their financial future this is it.
Great deals move quickly! If you would like to be put on our Investors Mailing list please fill out this form and indicate what type of investments you're looking for (cap rates, ROI, commercial, residential, etc.), and we'll make sure you hear about deals that match your criteria. We also work with a short list of our Premier Investment Clients. Our Premier Investment Clients get a 2 hour head start on any investment opportunity that we find. If one of them takes it within those two hours we don't send it out to everyone. We currently have a few spots open and if you would like the details in joining us as a Premier Investment Client please let us know.
What do I have to do to be a Premier Investment Client with My Real Estate Pro?
The best deals move fast. REALLY FAST. Most of the time they are gone before they ever hit the market. To make sure that our Premier Investment Clients never miss out on a deal to be a Premier Investment Client with My Real Estate Pro we need all the necissary information to submit an offer as quickly as possible. So we have to have on file:
- Initial Deposit Check (there is not a fee to join or maintain the Premier Investment Group membership)
- Proof of Funds
- Financial Qualification letter from your lender
- Have the ability to submit an offer within one hour (we have several options and ways to make this convenient and easy)
Let us know if you would like to be a member of our Premier Investment Client short list, and we can arrange our no obligation, no hassle exploratory meeting to make sure that we are the best fit for you.
Seth T. J. Miller and Carolina Chacon
Real Estate Hound Broker Associates
My Real Estate Pro!
Properties and listings sold were not necissarily represented by the advertising Broker.
;)
;)
