Investment Type | Why To Buy | Why Not To Buy |
Apartment Complex Multifamily Units |
*Best financing options *Maximum leverage *Less tenant loss *Good opportunities to purchase nationwide |
*Can be a money pit *Tenant problems *Management is critical *Buy to Buy Newer/Bigger |
NNN Leased Investments |
“Coupon Clipper” *No hassle Investment *Get Paid Each Month *No expenses *Depreciation potential *Hedge against inflation |
*Maybe big down-payment *Tenant goes bankrupt *Anchor tenant in a center relocates *No ability to raise rents and catch periodic appreciation waves |
Shopping Center Strip Center Retail Project |
*Less tenant loss
*Typically tenants pay
reimbursements = more
cash in your pocket
*Ability to pass through most expenses.
*Raise rents & catch appreciation wave *Demographics important
|
*Tenant loss-cash flow loss *Broker expenses to lease *Vacancy in a recession *Management intensive *Tenants expect tenant improvement money. |
Office Complex Office Building Multi-Tenant |
*Stable tenant base *Hedge on income loss w/multi-tentant building *Downtown locations offer great depreciation (high improvement to land ratio) |
*Expensive tenant improvement *Exposure to expense hikes may be buried in full service leases; may take longer to recoup added costs, e.g. utilities |
Ground Leases | *No hassles *Long term hold (20 years) *Hold can reap $$ bonanza |
*No depreciation. *No ability to raise rents *Higher down payment & less leverage possibilities |
Industrial Facilities | *Low maintenance tenants *Low cost improvements *Long term leases *May convert to retail and/or housing zoning to benefit from “obsolescence” over time as a city grows |
*May have to wait for new tenant during a recession *Environment issues *Less depreciation *Lower improvement ratio |
Mobile Home Parks | *Cash cows *Easy management *Potential to improve by “coaches” upgrade |
*Government interference with rent control (senior issues) *Potential Depreciation |
Mini-Storage Facilities | *Cash Cows *Little Maintenance *Little Overhead *Easy Management |
*Hard to find *High desirability *Subject to development saturation *Little depreciation |