Hundreds of years ago, people believed in the existence of unicorns. Today, we know that the mythological creatures are exactly that: a myth. However, there are plenty of proverbial unicorns in which people still believe, such as investment properties whose attributes are so incredibly impressive that, in most cases, they are pure fantasy.
DEFINING UNICORN PROPERTIES
Every New York property investor wants the best real estate he can find, but searching for some types of properties is like hunting for unicorns. In most cases, whether someone is looking for a “unicorn property” is a matter of perspective. While awesome properties are certainly out there, a unicorn property makes what would normally be considered “awesome” seem like a compromise.
For example, say that an investor targets a property that has a new 10-year triple net lease from a tenant that has received a credit rating of at least “A-” from Standard & Poor’s (S&P). The investor also desires a capitalization rate of at least 7% and requires the tenant to have a better than average annual operating income for its industry. This type of desirable income property can be acquired without great difficulty.
However, if the investor wants a property that has a new 25-year bondable lease from a tenant that possessed at least an “A” credit rating from S&P, desires a capitalization rate of not less than 20%, and requires the tenant to demonstrate an operating income that is in the top 1% of its industry, he or she would likely be searching for a unicorn property.
While such a property could conceivably exist, the chance of finding it at any point in time is slim; and therein lies the problem with unicorn properties: when buyers of commercial income property in New York refrain from making an investment until such a property is found, they waste valuable time that could be spent growing their property portfolio and increasing their net worth.
ARE YOU CHASING UNICORN PROPERTIES?
Buying income property in New York that has excellent attributes is indeed POSSIBLE. This is what Westwood Net Lease Advisors helps investors do daily. However, it is important to have a realistic conception of what excellent attributes are, and avoid targeting properties whose attributes may be unattainable. With our proprietary database of on-market and off-market properties across the U.S., Westwood Net Lease Advisors will help you find the best property for your goals.
