Ground Leases Investments are where you own the land, where the tenant has put significant amount of time and money in improving the land. Including having also applied, and gone through the whole building process, evolving permits, studies, engineering, county approval, etc. The tenant pays for all real estate taxes, insurance, maintenance, repairs, upkeep, cleaning, etc. The tenants usually have also performed extensive marketing studies, demographic studies, traffic counts, and have usually put a significant amount of money into advertising. All while paying rent on monthly basis, usually with annual increases, and usually the lease terms are longer than normal, so the landlord will have a sound long term investments, bringing immediate returns from anywhere for the next 10 to 50 years. And furthermore, the tenant is more likely going to stay at the property, due to the significant amount of monies and time invested in your land, in addition the customer base accumulated and customer familiarization.
Why do tenants do ground leases, instead of just buying the land? Buy leasing the land from you, the tenant avoids the large up-front cash payment required to purchase the property, allowing the tenant to use its credit line to improve the property, rather than to acquire the land. Furthermore, the improvements are depreciable, whereas the land is a non-depreciable asset. Additionally, ground rent paid by the tenant is deductible as an ordinary business expense.
"Buy land, they're not making it anymore." ~ Mark Twain
When purchasing a property, the value of the land and the structure affect the selling price. In a Ground Lease Investment, the purchaser is acquiring the land only, which is fully leased. The sales price is based off the rental income, versus the land alone, and most are paying between a 5% to 7% Cap Rate when initially purchased. When you purchase a Ground Lease Investment, the building only conveys with the land, after the lease is complete, or if the tenant at any defaults on any part of the lease, at which time, you could then sell the property for both the value of the land and building.
For a no obligation analysis of available properties, please feel free to contact us directly at (703) 675-7278 or Saul@PotomacCP.com. We look forward to working with you.
Buyer principals only - these listings are for a qualified principal end
buyer only. No commission shall be due or payable to any Agent, Broker or
Finder, these listings are for Principals Only, No Intermediaries, No Agents, No
Brokers, Principals Only Please. For more information, please contact Saul
Corral.
National C-Store
with Gas Station - College Park, MD - PRINCIPALS ONLY
NNN Corporate Guaranteed Lease, 6.3% Cap
Rate, $124,200 NOI, Price $1,971,428
