I am new fella in this business, came across a sale for lease of 0.62 acre building to Wendys. Following are the details
- Sale price 1.9million
- Rent 115,000 per annum with 10% increase every 5 years
- Leased for 20 years
- Cap rate 5.85%
- currently Wendys is paying half rent and will start paying full rent after construction (March 2006)
- Triple net lease with no owner responsibility
- Co-Broker fee 2%
Is this a good deal, personally I feel it is little overpriced as the cap rate is very low. If I invest the same amount of money I will get a good return, maybe around 10%.
If I want to look into this to negotiate a price, what are the things I should be concerned with. I am completely new to this field, so any help in this regards will be greatly appreciated.
Thanks in advance