The 1031 Doctor would travel the country with his dog Max during the 1990’s buying, selling, leasing and building NNN deals and Houston Texas was always great hunting grounds for deals after the RTC (Resolution Trust Corp) days where you could literally pick up land for pennies and make lots of money. In the old days cap rates were still very high in the 8-9% range but towards the end of the decade cap rates started to compress and those giveaway deals were drying up fast. I was in Houston for a meeting and actually went through the drive in at this Jack in the Box and still remember how amazing the curly fries were and had to go in a tell the manager how great his food was, and also introduce myself in case I could get to the area manager to present potential sites, naturally. The place was humming and it was the new prototype units. Today, the site has really come into its own with downtown Houston growing and the area population expanding so this site really has a great future, and I don’t think Jack in the Box will leave. https://www.houstontx.gov
The main issue with this deal is the lack of CPI protection in the lease with only an 8% cap max for each 5-year period, which is why they are offering such a healthy “going in” cap rate. I would grade this deal a sold B and try and get it for as close to a 7% cap as possible! Please note the ROFR (right of first refusal) granted the tenant to purchase the property within 15 days. that is manageable timeframe however it will still eat up part of your 45 days ID process with your 1031. I am not sure if the tenant will exercise it but considering the deferred maintenance that is noticeable, the tenant may indeed acquire the site to rebuild into the new prototype. https://www.jackinthebox.com
1031 Doctor helps high-income professionals-such as doctors, lawyers, and business owners- navigate and analyze NNN investments during a 1031 exchange. On this channel, I break down real deals across the country, including gas stations, fast-food properties, and single-tenant net-leased investments. learn how an industry veteran picks out the red flags and finds the hidden opportunities where most people miss the clues. Subscribe for daily insights, deal breakdowns, and real-world strategies.https://www.1031doctor.com