A real estate investor explains why a 12% cap rate makes sense for a car-wash property: the tenant just started in 2021 with no proven income history, the building is outdated, and vacancy would require major reconstruction. A national operator with strong credit might justify 6%, but this deal carries more risk.
Rewrite the LOI and point out that the reason why there's a 12%, 12% cap rate is because it's risk-adjusted cap rate for everything else. The 6 cap would be if it was a national credit, AAA-rated credit rating car wash provider. And this is not, this is somebody who started in 2021. They've, they, there's no proof of their NOI. There's no proof of it. Being able to scale or expand. And we know that the facility is outdated. And if the current provider was to, or the current tenant was to vacate, we would have to reconstruct or repurpose the entire property. So make this why our offer is at 2.1 and 12%.
