How do you evaluate a NNN Burger King Property to determine if its a good deal.

In Buying Property - Asked by GARY G. - Aug 19, 2010
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Answer(s)

Burnett F.
Owner/Investor
Glendale, CA

The purchase price will be a function of the income stream from the tenant - both the amount and the quality. Since the tenant pays all costs of repair, maintenance, taxes, insurance, etc., associated with the property, all you need to do is take the annual rent, determine what kind of return you expect (like an 8% return) and divide the rent by the return and you get the purchase price.
Other considerations that would affect the price would be the size of the land (is there excess land), the length of the cashflow (the lease term), rent increases, options held by the tenant, the general area of the property and neighbors, etc.

Aug 20, 2010
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Jose Cruz D.
Broker/Agent
Pico Rivera, CA

It's also a good investment if the NNN Burger King is operated by Carrols Corp. I have one under contract in Yorkshire, New York at around 8%Cap. Good luck!

Aug 21, 2010
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Diane Gillespie R.
Broker/Agent
Hodges, SC

I know of dozens of success stories and 3 horror stories. WATCH THE TERM!!!! Have plan B.

Aug 21, 2010
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Paul M.
Broker/Agent
Evansville, IN

Beware...in many areas BURGER KING's market share has been sliding. You may end up with an empty store.
Share with me what your goal is for this investment.

Aug 21, 2010
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Al B.
Broker/Agent
Henderson, NV

Make sure it is guaranteed by the Burger King Corp and has at least 10 years left.

Aug 23, 2010
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Alex M.
Broker/Agent
Glendora, CA

From personal experience, if it is not corporate owned, stay away. The security of a triple net comes from the tenant and the guarantor. There is nothing like having franchise as the guarantor, everithing else is short from a good guarantee.

Aug 23, 2010
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Alex M.
Broker/Agent
Glendora, CA

You need to take in consideration the internal rate of return on the investment not just the cap rate. Cap rate reflects the return for today not in the future. Internal rate of return takes in consideration income, escalations and increase in value due to the escalations at the time of disposition. A more accurate view of the investment.

Aug 23, 2010
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Barry F.
Broker/Agent
Flower Mound, TX

Gary, here are some things to consider when buying any NNN property. Best if corporate backed but there are solid franchisees in every major national brand, typically. Check the investor section of the BK website to get an annual report showing their financial condition. Google articles about quick service restaurants(QSR) to see how they are doing compared to competitors. (BK may be trailing a bit) Make sure the guaranty is included or attached and made a part of the lease; Guaranty should be with parent company and not a regional entity ie BK of Texas. Rent to be paid even if they close the store; verify rent commence date vs end date to make sure you have as many years left as is advertised. I talked to a property owner recently who thought he had 9 years left but only had 6 according to the lease language. Check condemnation clause in the lease to make sure it is fair and can't be used an excuse to bail if there is a condemnation that really doesn't materially alter their operations. How do store sales compare to BK average? Liklihood of leasing the property if BK goes under: Consider Age and condition of building, has it been upgraded recently; size of lot-any room for expansion, parking, access to and from, traffic counts, etc. Check if any road widening or other improvements might permanently alter the property. Easements in place with clearly delineated maintenance responsibilities if shared drives or parking, and that the BK lease provides for BK paying any expenses associated. Let me know if you have other questions or how I can help you. bforrest@texasnetlease.com

Aug 24, 2010
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James L.
Broker/Agent
Washington, DC

In addition to the answers below, which are all great answers, I would also highly recommend you visit the site. See the customer traffic. See the building and the facility. How is the operator treating the property? If the place looks like hell even if the cash is flowing it should raise a red flag. If the place is run well and looks clean then you have a little more of an idea that the people running and working at the Burger King will treat your property well and pay you rent in a timely manner. The point is that a great investment on paper when dealing with real estate is always tied to the REAL ESTATE. Check it out prior to plunking down the $$$.

Aug 25, 2010
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Larry C.
Owner/Investor
Mercer Island, WA

How do you evaluate a NNN KFC Property to determine if its a good deal.

Dec 11, 2012
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