In this video, Joel, Principal Broker, discusses the typical ROI that can be earned by investing passively in a single net lease property.
He also explains some of the additional income streams that are opportunities (which can) increase the ROI on your investment. Along with the additional income streams, he discusses ways to save money on the required down payment as well.
What is the cap rate on this type of property?
Typically when investing in a single tenant net lease property, the cap rate is between 5.75 to 6.25 on this type of property. Certain premium tenants like Chick Fil A and Mcdonald’s can trade in the 4 plus cap rate range.
Are there incentives if purchasing with a loan?
If purchasing with a loan, you may be able to get another 1%-2% cash-on-cash return off of your down payment, which is typically 35% or more required to purchase these types of properties. For instance, if you invest $100,000 and received an 8% cash-on-cash return, you would get $8,000 off the $100,000 annually before taxes.
What other income streams can I receive on this type of property?
You could also have additional income streams such as the mortgage principal paydown, any mortgage interest deduction, and tax depreciation to reduce taxable income.