Entity Edge

When evalating small commercial properties, buyers consider entity structure to minimize tax liabilities. Single-tenant NNN properties often attract invsetors seeking predictable income, while mixed-use properties may offer more flexible entity options. Cap rates for singlle-tenant NNN properties range from 5-7%, whereas mixed-use properties may see cap rates between 4-6%. Buyers may walk away if the entity structure isn't optimized for tax efficiency or if the cap rate is too low. A well-structured enity, such as an LLC or LP, can provide liability protection and tax benefits, making the investment more appealing.