Loan terms for NNN leased property.

I am looking to buy the NNN leased property which has about 15 left on the lease. Cost is about $500,000. I want to get the 75% financing. Tenant is the national chain but not publicly traded so does not have S&P rating. I would like to get the loan which amortize over 25-30 year and atleast 10-year fix.

Can you guys please tell me what type of loan terms I should expect. Basically.
Rate, Fixed Years, Amortization, Cost etc.

Since you don’t know if the tenant is investment grade, the interest rate will vary. Rates are usually fixed at a certain spread over the US Treasury yield. The rate is also dependent on the credit of the tenant and the lease. On investment grade tenants, the rate ranges from 5.5% to 7%.

Most terms are fully amortizing with Lease term on investment grade tenants. Other loan programs offer 5, 7 & 10 years.

Costs are loan fees, appraisals, environmentals, etc. I would budget at least 3% of the loan value for these and other closing costs.

Patti Porter


Thanks for the quick reply. Can I have a financial contingency in the sales contract which states that I need to get the loan with the terms below or better:

Loan amount: 75%, Amortization: 25 years, Rate: 6% fixed for 10-years, Points: 0

Is it usual to put contingency like this in the contract.

Yes, you can put anything you want into the sales contract but that doesn’t mean that the seller has to accept those terms.

Did you receive a package from the realtor or the seller that has a copy of the lease? Have you received all of the income & expenses for the past 3 years for the property? If you have that info, you can take it to a lender to get a LOI.



Thanks. I will try to get all the relevant documents including lease and get the letter of intent from bank before doing the sales contract.

I agree seller will probably have issue with putting the strict loan terms in the contract.

I also wanted to find out.

  1. Is LOI from bank a sure thing.
  2. If I am working with the mortgage broker instead of the bank directly what should I request. What if they back off before closing or ask for extra fees.

I just want to find out how investor usually do this.

A LOI from a lender is contingent upon due diligence of the lender (appraisals, etc).

When working with a broker, there should be a signed fee agreement in place before closing. This fee agreement just covers the broker’s fees. Any fees being charged by the lender will be given before closing.