NNN leases dollar general

I own two NN Dollar Generals and they reimburse the lessor for insurance if it isn't stand alone and provide it directly if the building is a stand alone building. Same would be the case for NNN stores. There are lots of NNN stores for sale with 15 year new leases advertised at asking cap rates of 6.75%. My cap rate is about 11%. Rent increases 10% every five years. It's a pretty good investment option.

Can you explain the cap rate? That's the part I keep getting hung up on all of this.

The capital rate of return is how much your investment were to make each year if you paid for it without a loan. It is calculated as follows -

(Total Annual Income - Total Annual Expenses) / Purchase Price

The answer is then converted to percent. On NNN (triple net) leases the tenant pays for all repairs, taxes, and insurance. So if rent was $5K a month and the building cost $1M, the cap rate would calculate to be 6%. Real Estate investment firms like to buy portfolios of NNN properties because they don't require any owner responsibilities.

On NN (double net) properties the owner is responsible for some maintenance, usually repairs over a certain dollar amount and roof and structure repairs.

You can get pretty good deals on NN stores. There are lots of those with asking prices around an 8 cap. I've got one in Louisiana that I will sell when the lease renews in October. I plan on setting the price around an 8 cap also.

I'm still wrapping my brain around this but the information is helping.