Hi fellow LL,

Yesterday I listened to a podcast and heard that small bay (or flex space or mini warehouse) isn't oversaturated like other real estate sectors and trading at 10% cap rate. Small bay is defined as a small space between 1000 sqft - 10000 sqft with a small office and a bathroom. Small businesses (e-commerce, HVAC companies, etc) rent the space to store their inventory and sometimes operate from it. Lease is usually 3 year NNN. Frankly 10% cap rate caught my attention. I wonder if you know any mastermind groups or courses about this topic? I'm trying to educate myself and build connections. Any advice is welcome. Thanks.

I can't help with your question but will wait for some of the guru types to chime in.

In my area, they sell those individually as condos. The price is so high, I can't see how anyone would make any money off of one.

Probably the guy who builds them is doing OK, but again, that is an expensive project, so the original investor has to be operating at a pretty high level.

Thanks everyone for your reply

zero[IN], same here. We both wait :-)

That 10% Cap rate is flawed at least in my area. I bought a place about 17 months ago for $112,000 and it rents for $1,500 NNN. So around here that niche is making over 16% Cap Rate. It took less than two weeks to fill the unit.

If you are planning on doing this with an existing NN or NNN lease in place, a state like Illinois is an awesome place to do it. You can get taxes reduced without too much hassle since they are so high to start with. NN/NNN places are valued with 10, 15 or even 20 leases in place. When they get sold with only 2 years left and a five year extension left, the huge sales price is cut in half. So since the sales price is half of what it was 20 years earlier, the taxes get cut in half.