How are NNN Properties Valued?

How are NNN Properties Valued?

NNN Properties typically are 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

J. Michael Sigrist

Compass Investment Properties, Inc.

861 W. Morse Blvd. #250

Winter Park, Fl. 32789

Office 407-647-5111

Fax 407-629-9220

Cell 407-953-2605

mike@compassorlando.com