asked 2012-06-13 11:47:45 -0500
Anonymous
Credit tenant pays $9600/mo NNN, and starting in September of this year, the tenants rent bumps to $12,600/mo NNN (just signed 5 yr renewal). Property is being marketed for sale based on a cap rate based using the annualized amount of $12,600/mo figure. Is this the correct number that should be used or should it be based on the $9600/mo figure?
Thanks
answered 2012-06-13 12:19:58 -0500
With the rent bump only a few months away I would value the property based on the rent bump cap rate. You could do a full IRR analysis over 5 years to get the true return. I would discount an offer to account for the time until the rent bump. By the time you close on the property you will most likely be pretty close to the rent bump anyways.
answered 2012-08-23 11:49:56 -0500
I agree with Pat. You are close enough to the rent bumps that anyone buying the property would realize that income.
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Asked: 2012-06-13 11:47:45 -0500
Seen: 100 times
Last updated: Aug 23 '12
