In the past I have mentioned some NN and NNN opportunities I have worked on.

What really amazes me is as much feedback I have received occasionally over these postings, I have never had anyone ever ask me what I consider the most important questions in Net Leasing structures......The actual structure itself.

Please ask yourself: What is more powerful, a monthly payment to an escrow account by the commercial tenant that the owner controls or asking the tenant to reimburse you for the taxes or insurance bill that you paid already?

Is the lease NN, NNN, Net lease or gross sales based? What systems do you have in place to make sure you will not be getting ripped off in the future?

How strong is the guarantor on the lease? Is it a single operator or does the person have five or six different businesses? Do they operate one location or multiple locations? I have had them guarantee 20,000 stores and I have them as independent operators to. Not once did anyone ask, how much difference is the Cap Rate if I take on additional risk of dealing with an operator with five locations instead of a national chain.

Instead, I gotten an earful from what type of business model or franchise the business operator has. I am more interested in where they want to go and the business plan that they have to do it than if they do it under a green sign or a red sign or a yellow sign. Money can be made if you have fire in the belly.

For landlords does it really matter if you have MFH, SFH, boarding houses or commercial? The fire in the belly speaks louder than the niche. Granted some niches are more time intensive and get paid better than others but it is that determination that will make the person and business.

If you have a NN property with a tenant that is considering leaving, what can you do to get the taxes lowered and make that three-year period into a 10-year lease? I absolutely love those high tax states when doing net leasing. The assessments are based on 15 and 20 initial leases in place. Those were worth 1,5M to 3M with the new build out and they are now selling needing HVACs and roofs for less than a third of that.

Do you do your own commercial roofs? Should you be installing 5-to-10-ton AC roof top units? These items get outsourced.

I have gotten more than an earful about working within the chamber to get qualified leads. I am open to anyone else's better ideas. I want to improve. You can find not only renters but commercial operators with proven backgrounds looking for commercial space.

I do sense though, for many - the path of least resistance is the path taken most often. If that happens to be you and you are happy with the results - awesome. It is crazy though to hear someone who is unsatisfactory with their business results in any manner but then refuse to change that process.

I am with Sid, commercial transactions are more complex, but the day-to-day operations are so much more hands off. It does require people to take that jump from being the biggest fish in a small pond to being a tiny fish in a large ocean. There are helping resources out there to help guide you. I just don't do commercial transactions.

If the numbers work out, I encourage you to pursue your dreams and be happy with the results you created. If you refuse to change, look at that image in the mirror and chew them out. You can be your own worse obstacle.

Very well said Ray.

We have discussed this before and I am closer to the edge about jumping into commercial now.

It certainly is true that humans can be their own worst obstacle. I am guilty of that many times.

Are you referring to getting an earful of certain things from the business owners themselves?

" What systems do you have in place to make sure you will not be getting ripped off in the future?"

Do you mean getting ripped off by the commercial tenant?

I will ask that question;

how much difference is the Cap Rate if I take on additional risk of dealing with an operator with five locations instead of a national chain?

Once you go commercial, you will never look at a SFH... Anybody reading this, the sooner you make the jump, more freedom and $$ you experience...

You need to go in eyes wide open. Yes it’s great if you have a tenant. In my town if it goes vacant it can be 2 plus years before you fill it. Depends on the type of commercial property we are talking about and the demand for it. Strip malls here are vacant. We have a medical building class A that is half full. We have have a bank building with office space on the 2nd floor vacant.

You need to go in eyes wide open. Yes it’s great if you have a tenant. In my town if it goes vacant it can be 2 plus years before you fill it. Depends on the type of commercial property we are talking about and the demand for it. Strip malls here are vacant. We have a medical building class A that is half full. We have have a bank building with office space on the 2nd floor vacant.

The last commercial building I looked at (and should have bought) had a tenant in it. He is my mortgage banker guy. I was ready to sign on the dotted line and then he changed companies.

His old company kept the lease intact so the place sat empty for a couple months, but rent was still paid. He moved in to a different place. After the lease was up he didn't move back and it sat empty and unrented for maybe six months.

I thought that would possibly have killed me, even though it was a cheap deal. $100k and it had a SFH at the back of the property, which I didn't want at all.

I backed out, the place sold and still sat empty. Then it got filled and has stayed that way for a couple years now. Realtors took it.

Had I bought the place I could have managed the down time. But I was chicken.

Had I been talking with people like Ray back then I would have a thriving little commercial building on a main drag in a decent town.

6er

There is a huge spread on the data so having the right team members onboard helps out 110%. In STNL property, the cost of square foot matters, the cost per year on the contract matters, the size and level of the guarantee and the location of property - all help to the Cap Rate.

I can send you a Cap rate report of you want.

Not all national franchises are created equal - in fact I suspect a major drug store chain may very well file chapter 13 this year. The stellar super stars in NNN include McDs and Chick A fil. These can be as low as 4%. Please no one buy these places........

Instead I like the places at 7-8% which are smaller operators, maybe in a small town or having less than 7 years left on the initial lease.