There Is Hidden Value Where Many Won’t Look

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(2 Min Read)

100% bonus depreciation is back, and investors are rushing towards fee simple deals with depreciation benefits. These will dominate Q4 and probably all of 2026. That means more competition which in turn will increase pricing. In fact, we are already seeing cap rate compression in assets that qualify for bonus depreciation recently brought to market.

Here is what everyone’s missing: NNN ground leases. There won’t be a headline reading “bonus depreciation” in your marketing brochure, and that’s exactly why they are out of favor. This marks the perfect time for the broker and investor who sees the void in the market.

Why Ground Leases Are The Best Deals Few Are Buying

Ground leases don’t include the building as part of ownership which means they don’t qualify for depreciation. That’s why your clients are passing on these properties. That’s also why prices are dropping while no one’s paying attention. 

Half The Price, Same Tenant: You’re buying the land, not the building. That cuts the price in half compared to comparable fee simple properties. Same location, same tenant, same lease terms - the investor pays 40-60% less. 

Low Rents = Easy Story: Rents are based on land value only. Rents do not include a return to the developer for the cost of constructing the building nor are they inflated with contributions from the owner. There is a story about intrinsic value from day one. No magic needed. That’s the pitch.

Tenant Has Millions At Risk = Secure Income Stream: Tenants have put millions into these sites. If they default, they lose everything. If they financed construction, the lender becomes your buyer’s lease guarantor. If the lender wants their loan paid off, they’re stepping in to make those rent payments.

Default = More Money: If the owner ends up with the building? The rent potential goes way up. You’ve just given your client a win, and you’re first in line to sell it again at the higher price. 

Demo or Keep the Improvements? Either Way = Pay Me: New tenants want to tear it down? Fine. That ground rent’s going up. Want to keep the building? Even better. Pay me. 

Enter Deal Ground

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Bottom Line: 

You don’t need to focus on the hot deal of the moment to win. In fact, if your deal looks like everyone else’s, your chances of making outsized returns for your client are probably minimized. 

Working on ground leases give you an opportunity to carve a niche and swim against the current - to stand out in the crowd. If you understand why the intrinsic value is so compelling you will get deals done and make more money. 

Read The Full Article Here

While other brokers are chasing Q4 tax deals, you’re building a pipeline with very little competition.

Be Kind & Win

DealGround

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