1. Single tenant NNN properties seem like the way to go, but you need to be careful. Quality of tenant (corp guarantee or franchisee), length of lease, sales at that location, etc. because if the location goes dark, your property value plummets. Multi-tenant has slightly lower risk but more management
2. Location of property depends on the amount of management involved and the returns you are willing to accept. I live in the bay area and if you really want a decent property here, it is hard to find something over 5% with reasonably low risk.
3. CAP Rate - This depends on the location and type of property - Bay area cap rates are very low, but if you go elsewhere, you should look at demographics and see whether the population is increasing or decreasing. Walgreens cap rates are around 7%, and Dollar General's are around 9%, and you can see that most Dollar General's are in small towns with not much room for appreciation.
Each property has to be analyzed on it's merits in terms of location, cap rate, appreciation, renewal increases and so on. If you want more help email me at email@example.com
Sep 23, 2010