Everything decent is $1.5M and up. What's the actual floor to get into one of these?

The sub-$1M listings are cheap for a reason and it's usually the tenant. A regional smoke shop on a five-year term at a 9 cap isn't a smaller version of a corporate net lease, it's a different asset with the same paperwork.

I've been watching this exact price band for a while. What I notice is that the equity requirement is worse than it looks, because net lease lenders on small deals often want 35 to 40% down plus a year of reserves, and they underwrite to lease term. Six years of remaining term and the loan gets shorter or the proceeds drop.

The fractional thing you read about is probably a DST. My understanding is those are securities sold through licensed reps, minimums often around $100k, and the pitch is aimed at people doing a 1031 out of something else. Which isn't you if you're starting with cash.

Ground lease positions occasionally show up small. You own the dirt under a building somebody else owns and collect rent on the land. Lower yield, but the entry price on a pad can be a lot less than the pad plus the building.

Or you buy the land and stay patient. A corner with a curb cut and utilities near a growing intersection is the input to somebody else's net lease deal later. That's a longer game than what you're asking about, though.

Worth knowing that non-recourse CMBS money generally doesn't want to bother below roughly $2M to $3M, so below that you're at local and regional banks with recourse and a personal guarantee. That surprises people who came to net lease expecting to be hands-off and end up signing personally. Confirm the recourse terms in writing, they move around.

Rural changes the math. Dollar store deals in small markets do trade in the $900k to $1.3M range with corporate leases and 10 plus years of term. You're trading exit liquidity for entry price, which is a real trade and not a free one.

Adding the numbers underneath that. On a $950k building at a 7.75% cap, rent is about $73,600. Bank debt at 60% loan to value with a 20-year amortization leaves you free cash flow in the $22k to $28k range depending on rate, against $380k of equity plus closing costs. That's a mid-single-digit cash yield on a single non-rated tenant with under six years of term, and no reserve for the parking lot if the lease is only double net. Compare that honestly to what the same equity does in a diversified net lease REIT before deciding the direct deal is better because you can see it.

Where the small-deal math starts working is when the remaining term supports the debt. Lenders size loans against lease term, so a five-year lease with a 20-year amortization and a five-year balloon means your entire outcome is a refinance or sale in year five with a possibly vacant building. A 12-year term on a $1.2M rural store with corporate credit is a fundamentally different loan request even though the price is similar.

One more constraint that isn't obvious from listings. Sale-leaseback flow from merger activity is expected to add supply, and that supply skews larger, portfolio-sized and aimed at institutional buyers. The small single-asset end of the market stays competitive with 1031 buyers who have a deadline and will pay 50 to 75 basis points through you because they have to place money by a date. If you're buying with discretionary cash and no clock, your advantage is patience, not price discovery.

The number felt like the whole question when I started reading, and now the number seems like the least interesting part. If a $950k deal nets a mid-single-digit yield on a tenant I can't underwrite, and the REIT gets me the credit without the diligence, then what exactly am I paying $380k of equity for? Depreciation and control, maybe. I'm not sure that's enough yet.