Retail Condo....everyone please chime in! - Posted by john

Posted by Ferris Anderson on June 27, 2007 at 14:12:10:

John

Cap rate is going to be different for each investor and will depend on the expenses that must be paid on the property. If you are looking for 80% or greater leverage on this property a 7% cap rate may not be enough. If you are using cash however, that may be a decent return. More important than cap rate for your consideration is marketing time (especially if you are financing the deal!!!). How long will it take you to market the property if it becomes vacant? This plus anticipated delinquency would determine your vacancy rate. Put this revised number in your cap rate formula and then you will know if this is a good investment or not. If you require any assistance in structuring finance for this deal let me know. Just drop me a line.

Ferris Anderson
Realtor
Mortgage Broker

Retail Condo…everyone please chime in! - Posted by john

Posted by john on June 26, 2007 at 13:24:20:

I need some advice. I am looking at a retail condo for sale with a triple net tenant. There is about 5 years left on the lease with the chance for renewal. The condo is in a major city at street level and has high foot traffic. The price is about $1,000,000 with a 7% cap. The question is if the tenant does not renew how do I determine what the vacant condo is worth at that time?