You don’t need a professional advisor to tell you that the value of office space has declined in the past couple of years as companies reduce their space need and adapt to the concept of remote work. On the flip side, it doesn’t take much research to be aware that residential multifamily properties continue to be valuable assets when properly managed, a condition only strengthened by climbing interest rates that are preventing first time home buyers from making that purchase, adding to the rental demand.

But what’s in between? We’re looking to acquire a McDonald’s location that we’ve held under a land lease for over 30 years. The landowners want to sell the land and McDonald’s wants to stay on it. An opportunity. And for major names of food service companies across the country, they are mostly opportunities for solid long-term investments, but usually with minimal returns that work only if the landlord doesn’t have a mortgage attached to the deal.

Our focus isn’t typically restaurant chains, it’s healthcare. And our portfolio of healthcare properties is still performing really well. But adding more? Not yet. We’re waiting for the cost of debt to come down a bit, or the prices of these properties – dialysis, urgent care, medical office, etc. – to reverse their climb of the past few years. Still a strong sector and one with decades of staying power in our view, but not yet the value they were 5 years ago. So we’re waiting patiently. But looking carefully at the same time.

Oh, and don’t be fooled by the NNN designation that brokers often put on properties to draw attention to them. The term technically means the tenant – not the landlord – pays all expenses of maintaining the property, but in recent years it’s been misused a lot. An ad that touts NNN almost always actually does have some landlord responsibilities beyond just collecting rent, usually related to the roof and structure of the building. An old roof can put a big dent in your investment returns if you suddenly have to replace one. Only those ads that say “Absolute NNN” or similar wording are truly without landlord obligations – a key consideration in estimating your ROI.

If you have similar thoughts, I’d love to hear from you. I think next year will be the time to get actively back in the market, and we will look anywhere in the US for good investments with dependable returns. How do we know how to find them and make the numbers work? That’s what we do.

We are Your CFO for Rent.