NNN single tenant vs NNN multi tenant which is better long term?
So I know each have there pros and cons.

My take is say you get a Chipotle at a 4 cap or a mom and pop multi tenant NNN at a 6 cap.

A lot of listings I see do not factor in TI for new tenants on the multi centers and vacancy loss. A lot of mom and pop centers have 3-5 year leases. 

What I am getting at is a lot of these multi tenant deals listing high caps are they true caps once you factor in TI and vacancy loss? 

Maybe the 6 cap is really a 5.25 on the MTNL so now the 4.5 cap STNL that is corporate backed looks much more attractive. W

What is everyone thoughts on the pros and cons of each MTNL and STNL as I am in the market and trying to justify buying a property below a 5 cap.
[{"id": "ilmruyj", "text": "You also have to factor in the strength of that tenant. What\u2019s the likelihood of a Chil Fil A going out of business vs a mom and pop shop. You also pay for that surety of income in the cap rate.\n\nSTNL is great because a lot of times there\u2019s very little hands on management required. That being said, your vacancy loss will never be limited to say 5%. It\u2019s either 0% or 100%. Multi-tenant deals will require more hands on management (even if it\u2019s playing mediator between bickering tenants) but if one tenant blows out, you still have some income to offset expenses.", "replies": [], "depth": 1}, {"id": "ilmxq24", "text": "I wouldn't take a below 5 cap on anything right now, these interest rates have to start pushing up cap rates soon.", "replies": [], "depth": 1}, {"id": "ilnhxle", "text": "There\u2019s not enough information here but I would only have a chipotle as my tenant if I had a shopping center. You\u2019ll get less favorable lease terms with a Chipotle rather than a small mom and pop, but a Chipotle will drive up foot traffic and activity in your shopping center which is great for other tenants in the center (unless you\u2019re a Qdoba) and that gives you a strategic advantage over other shopping centers and when you\u2019re negotiating other lease terms. Of course none of this matters if it\u2019s a single tenant space. Chipotle also has lower risk of default than the mom and pop shop, something to consider especially if you a more stable stream of income.", "replies": [], "depth": 1}, {"id": "ilnxo3f", "text": "It depends on the retail center. Never buy anything you aren\u2019t comfortable will lease relatively easy. I would be extra careful in buying something right now. If you have fresh cash that you don\u2019t need to spend I would be in wait and see mode for 6 months. If you have exchange money, just try to find the best deal. \n\nLease turnover is a good thing because you can raise the rates to market rate. In 10 years or less that chipotle will be a 6 cap (maybe) but your strip center will be 10 cap on price you paid. \n\nAlways make sure you have staying power. Real estate is about staying in the game. When the tidal wave hits, you want to make sure you don\u2019t get washed away.", "replies": [], "depth": 1}, {"id": "ilo877i", "text": "I focus on STNL and MTNL off-market brokerage. \n\nI'd say a majority of MTNL properties account for all the expenses in the NOI. It's  not the case when a tenants lease ends in 2 years, you don't know if they'll renew, and you may need to provide TI in order to lease it out again. This is one reason many investors choose to sell before the lease ends. \n\nIn general, STNL is safer because of the tenants credit and requires little to no management, however the term 'NNN' isn't black and white. you may have a property, but still held responsible for the parking lot or roof (larger, not everyday repairs) and it could still be considered a NNN lease, this is quite common. Additionally, credit worthy tenants often have corporate guaranteed leases, Dollar General for example, so even if there is a recession, and that particular location goes out of business, Dollar General the corporation will still be paying you the rent you're owed\n\nMTNL are a bit more risky cause the leases end at different times, and while you may have some investment worth tenants, you'll probably also have the mom &amp; pop stores who don't have a corporate guarenteed lease.  This, plus the need for more active management creates for a higher cap rates  \n\n\nhope that helps.", "replies": [], "depth": 1}, {"id": "ilo8qwc", "text": "its also worth noting, a cap rate for a STNL property varies according to the remaining lease term. if you are to buy a Chipotle at a 4 cap, it probably has 15+ years on the lease remaining.", "replies": [], "depth": 1}, {"id": "ilogy7x", "text": "Might be an unpopular opinion but NOI is NOI. Realistically the credit tenant with the corporate backed lease is more attractive but those locations can fail too. Granted there\u2019s more that goes into their market search like feasibility studies and what not, but at the end of the day you need to take risk to make the IRR or equity multiple that you want. A 4 CAP is safe and unrewarding. Ask yourself what you want to gain with your property.", "replies": [], "depth": 1}]