Many folks have asked me offline, where and how I research some of my commercial purchases. I wanted to share one of the sites I use. Placer.ai allows you to comparison shop specific franchises, zip codes and even exact stores with its peers.

So you might be able to find say a specific fast-food restaurant in a specific zip code, This site allows you to compare that Wendy's to that BK, McDees, Sonic Chic- Fil-A and KFC to one another based on site visits. Then you can compare say that Wendy's with all other Wendy's in operation. Now given that list of places to eat, I prefer Chic-Fil-A. Where that chain might be the one most likely to survive given a long list of competitors, that specific store might have a bad GM and might be performing badly.

The other thing this does is give you average sales data. I have a rural Dollar General. Some folks might think that is horrible. The sales volume per transaction is nearly twice as high as the national average. The next closest retail operation is 13 miles away, and it is the next DG. It too has good sales volume without having a huge population to draw on.

Like most worth wild things, there is a small cost for the monthly use, There is a free version that gives you the top performers nationwide. That will be of absolutely no use to you. Do you think McDonalds is going to sell it's top 1% performing stores to you? Do you think you can even afford it? Box stores can run you eight figures.

But coming down to our planet, you can get reliable information on solid franchised places with NN with six and seven figures. A 7-11 for example with a 30 year history, can go as low $850,000 depending on lease length left on the place and your responsibilities in the lease. If it is in the top 75%, that is a solid bet. If it is in the bottom 5%, regardless how much you like Slurpee's - I would encourage you to think twice. Hope that helps

I'm curious what range of cap rates are typical?

Also, what rent escalation is typical over a long term lease?

Place without a franchise in place 10 plus cap if work is involved

NN lease with smaller operator Franchise and greater than 5 years 7.0-8.5%

NN lease with larger operator 6.5%-8% depending on maintenance requirements

NNN lease run between 4.25-7.75% depending on tenant quality and lease length left.

Some great entry level franchises for us mom and pops are SafeLite, Dollar General, Tractor Supply, and Taco Bell.

I equate these places to growth and income stocks.

As for rent escalation clauses - that is where you really make your money by being aware of these. It is awesome to have income for 40 years, it is better to readjust to market rents periodically. Most investors only see the 40 years. A balanced approach creates protection against market cycles

There are ways for you to do value adds and juice your returns considerably.

Within the NN/NNN world, people pay extra money for a longer lease. Don't fall into that trap - at least initially. Buying a NN place that was NNN means the taxes are currently over assessed. Tell a Taco Bell for example, that the $1,500 per month they have been paying for taxes and the $2,000 towards rent ($3,500 total) can possibly be lowered - and if you do it successfully, how long would they want to lock in these lower rates. Instead of 3 or even 5 years, you will hear 10 and 15 years.

A NN Taco Bell is worth about 1.2M with three years left on lease. When you buy the place, you ask for both rent comparisons along with NN tax comparison. This will cost you an extra $1,000-3,000 on the appraisal. If you get the taxes lowered down to $800-1,000 based on it no longer being NNN, guess who is the driver seat? A NNN Taco Bell place with 3 years left is over 3M

The conversation goes from instead of paying $42,000 a year in rent to - $33,600 (assuming you are giving all the savings), they sign a 10- or 15-year lease and your place goes from 1.1M to 1.6M. You have bend lots of nails to make a half mill in western Pa. I am getting older and I find it easier to make money in easier ways.

Thanks Ray