A Side-By-Side Analysis can help you choose the best fit for you.
Compare:
IRR
Cash Flow
Payback Period
Need a Side-By-Side Analysis with financing options for your purchase? We are here to help you.
The Assignment: A client asked for assistance finding the “right” property to fulfill their 1031 investment purchase or upleg. The client’s goal for the investment was to meet a 6% cap rate with a maximum purchase price of $1,500,000. They also wanted market rate financing. The options for a quality, attractive tenant and investment narrows greatly at the price point of $1,500,000 and below. After an initial search, TNL recommended three tenants that would allow for the appropriate cap rate while maximizing cash flow in the financing. These tenants were:
· Dollar Stores
· Auto Parts Stores
· Quick Service Restaurant (QSR)
The Challenge: The current COVID climate has caused transactions to take longer and the pool of national lenders still lending has shrunk. At the smaller dollar request, the options are limited for quality properties especially in the income tax free states.
The Solution:
- Option 1: A Dollar Store still under construction that matched up with the client’s target 1031 closing date on their 1031 relinquished property or down leg. Chris sourced his network of brokers with deals yet to be marketed to locate this opportunity.
- Option 2: An Auto Parts store in a highly dense area of DFW. Chris sourced through an existing relationship with a seller who had this store in his portfolio and was thinking about selling.
- Option 3: A non-credit franchisee operated Quick Service Restaurant (QSR) on a high traffic count street and strong Metropolitan Statistical Area (MSA). The QSR was an open listing on the market.
To help the client compare the return and cash flow of each investment, Chris used his national network of lenders to quote each specific property.
