Should I sell my NNN investment or refi
I just permitted and developed a NNN property leased to a publicly traded company. 92k flat net except for roof and structure. 
7 year term. They only would agree to 5 years but did eventually agree to 7 since I refused to lease.

Bank offered me 3.6 percent for 7 years with a 25 yr am. Only 70 percent LTV.

I don't really know if they will stay. It is an auto rental company in CT..took 2 years to replace their location (no available land). 

It is downtown. Does 1m in sales (only been open 6 months).

I got offered 1.35 (unsolicited), Bank appraised it for 1.26 (they are stupid). Maybe I could get more too not really sure. 

Block from train station and larger piece of land.

I could use the funds for some other projects. Difference between refi and sale proceeds are pretty decent....

I owe 520k @ 4 percent fixed for the 20 yrs no balloon but it is transferable. Private. That also messes with my refi plan since I think that is a very good loan.

I was going to do a large multi there but the auto rental lease deal ended up being pretty easy.
[{"id": "fi6qbfp", "text": "Also probably 1/3 of my NW in this deal....", "replies": [{"id": "fi6u4dh", "text": "Getting a coterminous loan is rare, nice job", "replies": [], "depth": 2}, {"id": "fi6vmcx", "text": "When you say it's an auto rental company, is that the highest and best use for the property?  Does it look like a dealership? Or is it office space?", "replies": [{"id": "fi74gsj", "text": "it's a 7,000 garage on .47 acre. I would probably demo and build residential or have three smaller tenants.\n\nthere are a lot of residential going up (1,000 units within 2 blocks and a low vacancy rate)", "replies": [{"id": "fi995l9", "text": "What is the zoning?\n\n1,000 units makes it seem like there might be demand for something other than auto rental.", "replies": [{"id": "fi9oth9", "text": "I think I could get 20 to 30 units easily. \nI haven't crunched the numbers but it isn't a huge margin. I would have to give up a 1.35 million value to get 30 units so the per unit dirt cost is high still.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fi6qysz", "text": "Refinance &amp; repeat.. This is how you build wealth. If you sell, you\u2019ll have to pay capital gains.", "replies": [{"id": "fi6rw85", "text": "If only there were some method to avoiding capital gains....", "replies": [{"id": "fi6ujox", "text": "Like a 1031.. or what else would you suggest? Not a fan of 1031s.", "replies": [{"id": "fi6vga6", "text": "Why is that?", "replies": [{"id": "fi7his7", "text": "I've never done it, but doesn't a 1031 put pressure on you to quickly find a similar property? Might not select the best deal with that fire under you but idk", "replies": [{"id": "fi7hu76", "text": "I wouldn't call it pressure.  You should have a plan for sure.  https://theintercept.com/2018/06/05/chelsea-manning-video-twitter-police-mental-health/  It's good to have your sights on an exchange prop before your closing/sale or even have it under contract contingent to sale of your prop.", "replies": [], "depth": 6}, {"id": "fi98wys", "text": "Well it\u2019s February. Literally 10 months to find your downleg", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "fi6ta0q", "text": "\ud83e\udd26\u200d\u2642\ufe0f", "replies": [], "depth": 2}], "depth": 1}, {"id": "fi6st45", "text": "There are a lot of additional factors that come into play before advising a move, but in terms of both capital markets and selling market, it's a good time. I can offer to give you my insights on pricing and fill you in on other factors you may not have considered when weighing options if you're open to it. It's what my team and I do all day every day for clients.", "replies": [], "depth": 1}, {"id": "fi6szs0", "text": "70% LTV is pretty good. Is the bank quote non-recourse? \n\nOne strategy would be to sell and 1031 the proceeds into something else with longer term. Then you can evaluate your next move without burning lease term. Does your current tenant have renewal options?", "replies": [{"id": "fi747ni", "text": "No not non recourse. Full recourse.", "replies": [{"id": "fi92zr0", "text": "they have 2 five year renewals that they have to excersize 18 months in advance", "replies": [], "depth": 3}, {"id": "fi98r3w", "text": "Don\u2019t do it. Not worth tying your personal estate to one deal", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fi6tmzy", "text": "Refinance. Get the tenant in place and see how they do after a few years in that location. If you\u2019re not seeing them hit their numbers maybe think about selling.  Relative to other NN lease deals 7 years is not a lot so you will have a harder time selling at a good cap rate.", "replies": [], "depth": 1}, {"id": "fi6uywh", "text": "Right now is definitely a good time to sell net leased properties and use the funds for new opportunities.\n\nAlso, is the $1 million in sales an annualized number? If so, that equates to a 9% rent expense. Not sure about rental companies but when we analyze net leased QSRs we typically perfer to see a rent expense ranging from 6% to 8% of gross sales.", "replies": [{"id": "fi74od9", "text": "I think the average is 500k in sales per location. Hard to figure it out since I couldn't find good numbers. \n\nAlso I think that relative to QSR this is \"better\" since you need less employees to run it.\n\nThey were at the other location for 25+ years and would have stayed ...but they got kicked out and a hotel was built.", "replies": [], "depth": 2}], "depth": 1}, {"id": "fi6yzo3", "text": "If you have a better investment opportunity with a higher return then cash out now, if not then sit tight. For this asset your highest percentage return is going to be right now and it will be diluted with time.", "replies": [], "depth": 1}, {"id": "fi6zcut", "text": "Sell sell sell STNL buyers significantly drop off when there is less than 7 years of term (10 realistically). Curious what your initial invest lent was? If your investment was low enough and you are making healthy double digit return then maybe not", "replies": [{"id": "fi78n20", "text": "And this is literally the strongest market to be a STNL seller in right now. I think take the winnings and fund other projects. Especially since 1/3 of his net worth is in this deal", "replies": [], "depth": 2}, {"id": "fi7ua41", "text": "This should be top comment. \n\nEvery day of term that\u2019s burned off is both reducing the pool of buyers and reducing the price those buyers will pay. \n\nSELL!!!!", "replies": [], "depth": 2}], "depth": 1}, {"id": "fi74mbr", "text": "It depends on your investment goals. It depends on if you think they will renew and if you think you could find another tenant in 7 years. By the sound of it, not much was available to lease right now for your tenant.\n\nRegarding the bank, was that the lending value? Sometimes the value to lender gets discounted a bit from market value. The max LTV gets applied to the already lower lending value. It isn't dumb, It's smart for them to do this because it limits their risk. That being said, it's also possible the bank is dumb.", "replies": [], "depth": 1}, {"id": "fi76ohf", "text": "No harm taking the money, 1031 to another project.", "replies": [], "depth": 1}, {"id": "fi7mdoo", "text": "Is there an investment you want that needs $750k that you can't do with $325k? Would you exchange? If not how long have you owned the building and what's your basis? It's arguable that the property is worth the most it will be worth right now. That refi loan is very attractive. The private loan is a good loan but there's not really any value in its ability to be assigned and it hurts the value if there is any type of defeasance/yield maintenance/prepay penalty.", "replies": [], "depth": 1}, {"id": "fi7ngqt", "text": "I reccomend selling. The reason for this is that you are most likely getting paid a premium on rent because these companies have no real estate division and you have a built to suit building. When your lease expires what's going to happen is the company is going to try to basically fuck you on the leasing and bring it down as much as they can. If you refuse, what they're going to do is hire another developer willing to build them a new building and leave you with an empty box designed specifically for them possibly making it very hard to re-lease or sell. I'd sell and buy a NNN you can rehab in an add-value situation with multiple tenants.", "replies": [], "depth": 1}, {"id": "fi7vtqi", "text": "What does the $1.35m calculate to as a cap rate on the income stream?", "replies": [{"id": "fi8dwad", "text": "6.8", "replies": [], "depth": 2}], "depth": 1}, {"id": "fiqyqez", "text": "I would advise a sale, they have you under the gun in year 7 due to the single tenant nature of the deal. A built to suite asset can be difficult to backfill and you would have to carry the loan if they in fact vacate. \n\nThis is assuming you look around and find a way to put the capital to work via 1031 without overpaying..", "replies": [], "depth": 1}]