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Am I the only one who thinks triple net leases are overrated?
I just crunched the numbers on a property in Austin with a triple net lease. Everyone says you want these because the tenant pays everything. But I found out the cap rate was only 5.2% on that deal. That's lower than a standard gross lease property I looked at in San Antonio that hit 6.8%. I got this from a local market report from Marcus & Millichap last week. The extra risk of a tenant leaving and you being stuck with all those expenses just doesn't seem worth it. Has anyone else found a triple net deal that actually beat a good gross lease on total return?
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the_mia1mo ago
Plus that 5.2% doesn't even keep up with inflation most years.
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beth_sanchez471mo ago
Plus that number is cooked by averaging out the big market winners.
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taragrant15d ago
Honestly I get why people say that, but it's not really fair to just write off the whole number like that. @beth_sanchez47 look at it this way - if you ignore the biggest winners, you're basically only counting the losers and the average performers. That's like saying my car's gas mileage is bad because I only drove in stop and go traffic all day. The S&P 500 has real companies with real growth, and the average return over 20 years is actually pretty solid when you factor in reinvested dividends. Plus, most people don't have the time or skill to pick individual stocks, so the total market return is literally what a regular person can expect if they just buy the whole index.
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