In today’s market, as of January, 2018, the demand for quality investments far exceeds supply.

To Sell or To Buy

Investors of all types consider real estate investments a good alternative to their stocks/bonds/currency buckets. Investments in either office or industrial properties are valued based on the income from the tenants, the strength of the credit and the length of the lease term. Additional valuation components often reflect the age/condition of the building and land site itself, along with general market conditions and location.

If you are the owner of a property that has a longer term lease with a creditworthy tenant, your asset could be very marketable to sell into the investment arena. Longer term means at least 5 years, with a 10 year term being more valuable. Longer terms, like 15-20 years, are extremely desirable to investors.

A considerable factor in terms of desirability is the triple net nature of the lease. This means that the building operating expenses (taxes, insurance, utilities, and general maintenance) and building systems maintenance (roof, pavement, air conditioners, etc.) are paid for by the tenant themselves. This arrangement constitutes a true triple net lease. For the buyer of this investment, this means limited, if any, ongoing landlord responsibilities. There are variations on the level of tenant responsibilities that can be quantified and reflected in a property’s pricing.

Investors are hot to purchase property in Florida, to avoid state income taxes. Many California buyers are moving their funds into this state for this reason. Investors also like the returns on these type of investments, often between 7-11% annually, plus the tax benefits that accrue to owners. For the time being, the tax reform act is preserving much of the tax benefits for passive investors.

Our firm completed 5 such sales last year and as a result, we have an extensive list of qualified buyers for NNN industrial investments in Florida. We look forward to visiting with you to learn about your goal in selling or buying a NNN property.

Cummins Portfolio Memorandum

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