Bill Giberson | 561-305-0505
Commercial Real Estate For Sale & Lease
Our Commercial Real Estate Experts
Commercial properties, investment properties, and any other commercial real estate you can think of in South Florida can all be found right here! The expert commercial real estate agents at Lang Realty have an extensive background in listing commercial real estate and investment properties in all areas of South Florida, stretching from Melbourne to Miami. Lang Realty has access to an array of commercial and investment properties throughout the entire state of Florida, in addition to properties that are not publicly listed.
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NNN AND 1031 PROPERTIES
NNN Properties are typically free standing buildings that are leased to tenants for a 10 to 25 year term. NNN Properties offer the advantage of little or no management responsibilities as the tenant pays for all, if not most of the expenses. The investor collects their rent with little to no other involvement.
Tenants in NNN Properties are divided by both quality and type of businesses they are in. Qualitatively NNN Properties have either credit or non credit tenants. The most desirable (least risk) NNN Properties have investment grade (rated BBB- and better) credit tenants.
Non credit tenant NNN Properties have tenants that are not credit rated. These tenants are often regional or local businesses or companies that are unrated. Some tenants are considered credit worthy yet are unrated because they carry no debt on their books.
Who Purchases NNN Properties?
NNN Properties are appealing to those who wish to have absolute ownership of their commercial real estate investments and have little to no management responsibility. The alternative ways of owning non-management commercial real estate would be to own a security in the form of a REIT or mutual fund or invest in fractional ownership Tenant in Common properties.
A major benefit of 100% direct ownership is control and the ability to defer future capital gains by doing a 1031 exchange when the property is sold. For numerous investors the lack of immediate liquidity inherent in NNN Properties is offset by the lack of volatility NNN Properties offer when compared to a securitized investment. Investors should carefully consider their need for liquidity when considering investing in NNN Properties.
How are NNN Properties Valued?
NNN Properties are usually valued using their Capitalization Rate also referred to as Cap Rate. NNN Properties cap rates reflects the value of a stream of economic benefits discounted for time and risk. Generally this is computed as a pretax cap rate using the Net Operating Income (NOI) for NNN Properties.
NOI is income less all expenses before debt service. The Cap Rate is the NOI divided by the purchase price for NNN Properties. Conversely the NOI divided by the Cap Rate will equal the purchase or selling price.
Example of Cap Rates for NNN Properties:
NOI = $100,000/10%=$1,000,000 Purchase or Selling Price NOI = $100,000/$1,000,000=10% Cap Rate
How are Cap Rates Determined for NNN Properties?
Some of the major considerations when calculating Cap Rates for NNN Properties are:
The credit worthiness of the tenant.
The length of the lease, typically 10 to 25 years.
SYNDICATION & CROWDFUNDING
Real estate syndication is “crowdfunding for real estate” before crowdfunding for real estate ever existed. In it’s the simplest form, both syndication and crowdfunding involve pooling capital with other individuals or investors for a common purpose or a common goal. In real estate, that common purpose is the purchase of a real property, a physical building you can see and touch.
Why do people engage in real estate syndication?
The leading reason investors participate in real estate syndication or crowdfunding for real estate is access to deal flow. Not every investor has the time to search and underwrite hundreds of properties to find a gem to acquire. There are thousands of real estate companies all over the United States who do this for a living. By getting involved through real estate syndication, investors have access to this deal flow and the ability to invest in real estate without the hassles of property management.
Who is involved with a real estate syndication?
The first factor for a real estate syndication is a “syndicator” or “sponsor”. This individual or company is in charge of acquiring, finding and managing the real estate. They have a history of real estate experience and the ability to underwrite and do due diligence on the real estate. The other party is the investors. These are the individuals who invest with the syndicator and own a percentage of the real estate as a result. They get all the benefits of property ownership, but they are not involved with acquiring the property, arranging financing (if there is a loan on the property) and doing day-to-day management. In many transactions, there is a third party, the Joint Venture (“JV”)/Equity partner. This JV partner typically has access to a large number of investors and serves as a conduit between the syndicator and the investors. In addition to help with financing, they may help the syndicator with reporting, communications and even tax documentation.
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