Introduction to NNN Lease Commercial Real Estate Investing

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


Today’s VIPs
(very important points)
• CAP = NOI / PRICE

• How to make money in commercial real estate

• Spotting a good deal

• Case study


Disclaimer
This is NOT
legal, tax or investment advice.

No agency created.

Educational only. Consult your advisor.


Proﬁt
ROI =
(Money + Time + Hassle)

We all want more proﬁt with less invested


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


Cash Throw Off
from
Rental Income


Equity growth
from loan amortization


Tax savings
from depreciation


Equity growth
from appreciation
(CAP Rate Compression)


CAP = NOI / Price

10 CAP = $10,000 NOI / $100,000 PRICE


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


NOI
PRICE =
CAP

$100,000 PRICE = $10,000 NOI / 10 CAP


NOI
PRICE =
CAP

$125,000 PRICE = $10,000 NOI / 8 CAP


Equity growth
from rent increases
(income/CAP)


NOI
PRICE =
CAP

$125,000 PRICE = $12,500 NOI / 10 CAP

As a seller we want more NOI


Arbitrage

CAP Rate > Interest Rate

8% RETURN - 5% COS T of BORROWING = 3% PROFIT ON BANK’S MONEY


Equity growth
from Lease Renewal

Longer term lease = lower CAP


Equity growth
from increase in
Tenant’s credit
Stronger tenant = lower CAP


Forced Equity from
improved tenancy
or development

Higher NOI = Higher PRICE


Evaluating A NNN


Releasing
Tenant & industry income potential Lease
strength Term

Financing Durability of Cost of
availability tenant
Income improvements

Property
attributes Demographics
for expenses Upside for releasing
potential


Durability of Income
determines

Market CAP

“Net Leased Family Dollar”
Chattanooga, TN

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

Geographic Information

Chattanooga 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.


Financial Information

Purchase Price: $678,000
Gross Rent: $56,000
Vacancy $0
Management $0
Property Taxes $0
Insurance $0
Maintenance -$1000
HOA / Misc $0
Family Dollar Stock Price
Net Operating Income $55000
CAP Rate 8.11%

Financing Information
Purchase Price $678,000
Down Payment 15%
Down Payment $101,700
Loan $576,300
Closing Costs $7,000
Total Cash Invested $108,700
Interest Rate 4.75%
Loan Term 25 years
Monthly Payment -$3865.40
NOI $4,583.33
Cashflow $717.93
Cash Throw Off 7.9%

How can I make money
with 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

NN Lease Post Office
“mail box money”

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

Will the post ofﬁce go out of business?

The USPS employs over 574,000
workers and operates over 218,000
vehicles.

The USPS is the operator of the largest
vehicle fleet in the world.

The USPS traces its roots to 1775
during the Second Continental
Congress, where Benjamin Franklin
was appointed the first postmaster
general.

The USPS is legally obligated to serve
all Americans, regardless of geography,
at uniform price and quality.

Financial Information

Purchase Price: $525000
Gross Rent: $51000
Vacancy $0
Management $0
Property Taxes $0
Insurance -$1,059
Maintenance -$300
HOA / Misc $0
Net Operating Income $49641
$12.21 /sf NN
CAP Rate 9.46%

Financing Information
Purchase Price $525000
Down Payment 25%
Down Payment $131250
Loan $393750
Closing Costs $6,000
Total Cash Invested $137,250
Interest Rate 5.5%
Loan Term 25 years
Monthly Payment -$2418
NOI $4,137
Cashflow $1719
Cash Throw Off 15.0%

How can I make money
with 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


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

Introduction to NNN Lease Commercial Real Estate Investing

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