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Introduction to NNN Lease Commercial Real Estate Investing

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Introduction to nnn commercial real estate investing webinar. You can watch this presentation here: http://youtu.be/vjfgS3q_4yc Find great videos on real estate investing and real estate investing …

Introduction to nnn commercial real estate investing webinar. You can watch this presentation here: http://youtu.be/vjfgS3q_4yc Find great videos on real estate investing and real estate investing opportunities on our website: http://www.Hasslefreecashflowinvesting.com


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  • 1. www.HasslefreeCashflowInvesting.com Intro to NNN Investing Professional Investor David Campbell Founder of Hassle-Free Cashflow Investing David@HassleFreeCashflowInvesting.com (866) 931-9149 Ext. 1
  • 2. www.HasslefreeCashflowInvesting.com Today’s VIPs (very important points) • CAP = NOI / PRICE • How to make money in commercial real estate • Spotting a good deal • Case study
  • 3. www.HasslefreeCashflowInvesting.com Disclaimer This is NOT legal, tax or investment advice. No agency created. Educational only. Consult your advisor.
  • 4. www.HasslefreeCashflowInvesting.com Profit ROI = (Money + Time + Hassle) We all want more profit with less invested
  • 5. www.HasslefreeCashflowInvesting.com 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
  • 6. www.HasslefreeCashflowInvesting.com Cash Throw Off from Rental Income
  • 7. www.HasslefreeCashflowInvesting.com Equity growth from loan amortization
  • 8. www.HasslefreeCashflowInvesting.com Tax savings from depreciation
  • 9. www.HasslefreeCashflowInvesting.com Equity growth from appreciation (CAP Rate Compression)
  • 10. www.HasslefreeCashflowInvesting.com CAP = NOI / Price 10 CAP = $10,000 NOI / $100,000 PRICE
  • 11. www.HasslefreeCashflowInvesting.com NOI CAP = PRICE 10 CAP = $10,000 NOI / $100,000 PRICE As a buyer we want a HIGH CAP as a seller we want a LOW CAP
  • 12. www.HasslefreeCashflowInvesting.com NOI PRICE = CAP $100,000 PRICE = $10,000 NOI / 10 CAP As a buyer we want a HIGH CAP as a seller we want a LOW CAP
  • 13. www.HasslefreeCashflowInvesting.com NOI PRICE = CAP $125,000 PRICE = $10,000 NOI / 8 CAP As a buyer we want a HIGH CAP as a seller we want a LOW CAP
  • 14. www.HasslefreeCashflowInvesting.com Equity growth from rent increases (income/CAP)
  • 15. www.HasslefreeCashflowInvesting.com NOI PRICE = CAP $125,000 PRICE = $12,500 NOI / 10 CAP As a seller we want more NOI
  • 16. www.HasslefreeCashflowInvesting.com Arbitrage CAP Rate > Interest Rate 8% RETURN - 5% COS T of BORROWING = 3% PROFIT ON BANK’S MONEY
  • 17. www.HasslefreeCashflowInvesting.com Equity growth from Lease Renewal Longer term lease = lower CAP
  • 18. www.HasslefreeCashflowInvesting.com Equity growth from increase in Tenant’s credit Stronger tenant = lower CAP
  • 19. www.HasslefreeCashflowInvesting.com Forced Equity from improved tenancy or development Higher NOI = Higher PRICE
  • 20. www.HasslefreeCashflowInvesting.com Evaluating A NNN
  • 21. www.HasslefreeCashflowInvesting.com ReleasingTenant & industry income potential Lease strength TermFinancing Durability of Cost ofavailability tenant Income improvements Property attributes Demographics for expenses Upside for releasing potential
  • 22. www.HasslefreeCashflowInvesting.com Durability of Income determines Market CAP
  • 23. “Net Leased Family Dollar” Chattanooga, TN
  • 24. Property Information High Visibility Location Strong Traffic Counts Net Leased Asset - Minimal Owner Responsibility Investment Grade Tenant Built In Rental Increases Lease Expiration - 1/31/2020 Family Dollar - Chattanooga
  • 25. Geographic InformationChattanooga is located in the heart of the southeast, centrally located between other major cities such as Nashville, Huntsville, Birmingham, Atlanta, Knoxville, Ashville, Columbia, and Charlotte. Family Dollar - Chattanooga
  • 26. Family Dollar - Chattanooga
  • 27. Financial InformationPurchase Price: $678,000 Gross Rent: $56,000 Vacancy $0 Management $0 Property Taxes $0 Insurance $0 Maintenance -$1000 HOA / Misc $0 Family Dollar Stock PriceNet Operating Income $55000 CAP Rate 8.11% Family Dollar - Chattanooga
  • 28. Financing Information Purchase Price $678,000 Down Payment 15% Down Payment $101,700 Loan $576,300 Closing Costs $7,000Total Cash Invested $108,700 Interest Rate 4.75% Loan Term 25 yearsMonthly Payment -$3865.40 NOI $4,583.33 Cashflow $717.93Cash Throw Off 7.9% Family Dollar - Chattanooga
  • 29. How can I make moneywith 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 Family Dollar - Chattanooga
  • 30. NN Lease Post Office “mail box money”
  • 31. Property Information 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
  • 32. Will the post office go out of business?The USPS employs over 574,000workers and operates over 218,000vehicles.The USPS is the operator of the largestvehicle fleet in the world.The USPS traces its roots to 1775during the Second ContinentalCongress, where Benjamin Franklinwas appointed the first postmastergeneral.The USPS is legally obligated to serveall Americans, regardless of geography,at uniform price and quality.
  • 33. Financial InformationPurchase Price: $525000 Gross Rent: $51000 Vacancy $0 Management $0 Property Taxes $0 Insurance -$1,059 Maintenance -$300 HOA / Misc $0Net Operating Income $49641 $12.21 /sf NN CAP Rate 9.46%
  • 34. Financing Information Purchase Price $525000 Down Payment 25% Down Payment $131250 Loan $393750 Closing Costs $6,000Total Cash Invested $137,250 Interest Rate 5.5% Loan Term 25 yearsMonthly Payment -$2418 NOI $4,137 Cashflow $1719Cash Throw Off 15.0%
  • 35. How can I make moneywith 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
  • 36. www.HasslefreeCashflowInvesting.com If you have interest in acquiring income property, please send an email to David@HasslefreeCashflowInvesting.com and we’ll schedule a free consultation Professional Investor David Campbell Founder of Hassle-Free Cashflow Investing David@HassleFreeCashflowInvesting.com (866) 931-9149 Ext. 1