asked 2012-05-06 21:46:40 -0500
When evaluating single tenant investment properties for sale, how much does a 5 year lease detract from the value of a property versus a 10 year lease, if at all. Also, how much does a gross lease detract from the value compared to a NNN lease? Is there an easy way to evaluate this? Assume all other factors are equal - location, tenant strength, market, etc.
Thanks for your help!
answered 2012-05-07 13:11:41 -0500
An investor is taking a greater risk with a gross lease. If energy costs spike or property taxes increase the investor will be on the hook for all the increases. This is the reason investors prefer NNN investments or gross leases with expense stops. As far as the length of the lease, I would say the strength of the tenant would be more of a factor for a prospective buyer than the length of the lease. The lease is only as good as the signature backing it. If you have a strong tenant and a 5 year lease with options you should have no problems.
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Asked: 2012-05-06 21:46:40 -0500
Seen: 35 times
Last updated: May 07 '12
