Cautionary Tale

I recently had a close call with a small commercial deal in San Antonio that taught me a valuable lesson. The property was a single-tenant NNN lease with a cap rate of 6.5%, which seemed attractive at first. However, upon further analysis, I realized that the tenant's creditworthiness was shaky, and the lease was set to expire soon. I was about to pull the trigger when I decided to walk away due to the high risk of vacancy and potential loss of income. In conttrast, a mixed-use property in the same area with a cap rate of 7% caught my attention. The diversified tenant base and longer lease terms made it a more appealing option. The experience taught me to prioritize tenant creditworthiness and lease term over cap rate. It's a mistake that could have cost me deary, but I'm glad I doded that bullet. Now, I'm more cautious when evaluating small commercial delas, and I always consider the potential risks and downsides before making a decision.