This article was first published in early 2025 as a market outlook. It was revised in October 2026: the forecasts have been replaced with a short review of what happened, live market data that updates automatically, and a framework for judging whether the timing works for your purchase.
“Is now a good time to buy?” is the most common question about investment grade net lease property. There is no universal answer, but three numbers frame it: the cap rate you can buy at, the yield on safer alternatives, and the cost of your financing. For the rating scale, see the investment grade guide.
What Happened After Early 2025
The Federal Reserve, which began cutting in September 2024 and cut twice more that year, made three further cuts in late 2025, ending the year at a target range of 3.50% to 3.75%. Long-term rates did not follow in a straight line: the 10-year Treasury yield traded between 3.97% and 4.79% during 2025 and ended the year at 4.18%. It was 4.12% on October 1, 2025 and is 5.24% as of October 1, 2026. Forecasts that falling short-term rates would quickly bring down long-term borrowing costs did not hold, which is why the framework below relies on current data rather than predictions.
Today’s Numbers
| Measure | Current | As of |
|---|---|---|
| Median asking cap rate, net lease listings we track (6,957 listings) | 6.40% | October 8, 2026 |
| Middle half of asking cap rates | 5.75% to 7.16% | October 8, 2026 |
| Median asking cap rate minus 10-year Treasury | +116 bps | October 8, 2026 |
| 10-year Treasury yield | 5.24% | October 1, 2026 |
| ICE BofA US Corporate Index yield (investment grade) | 5.99% | October 1, 2026 |
| ICE BofA BBB US Corporate Index yield | 6.19% | October 1, 2026 |
Asking cap rates are not closed-sale cap rates, and long leases to highly rated tenants usually ask less than the median. Compare a specific property’s cap rate with the yields above: the gap is what you are paid for illiquidity, real estate risk and management, offset by the tax benefits of owning property. See NNN cap rates by tenant.
Positive Leverage Depends on Debt Service, Not Just the Rate
Buyers often compare a cap rate with a loan’s interest rate. The better comparison is the cap rate against the loan constant: annual debt service, including principal, divided by the loan amount. Example: a property with $200,000 of net operating income bought at a 6.50% cap rate ($3,076,923), with a 60% loan of $1,846,154 and $1,230,769 of equity, before closing costs and reserves.
| Financing | Loan constant | Annual debt service | Cash flow after debt service | Cash-on-cash return |
|---|---|---|---|---|
| All cash (no loan) | n/a | $0 | $200,000 | 6.50% |
| 6.00%, interest only | 6.000% | $110,769 | $89,231 | 7.25% |
| 6.00%, 30-year amortization | 7.195% | $132,824 | $67,176 | 5.46% |
| 6.00%, 25-year amortization | 7.732% | $142,738 | $57,262 | 4.65% |
| 6.75%, 25-year amortization | 8.291% | $153,063 | $46,937 | 3.81% |
A 6.00% loan on a 6.50% cap rate property produces positive cash leverage only if it is interest-only. With amortization, current cash flow falls below the all-cash return, even though principal payments (about $32,900 in year one on the 25-year loan) build equity. Rent increases, the exit cap rate and loan fees all change the full-period result, so model the actual loan terms.
How to Judge the Timing for Your Purchase
- Price against alternatives: is the property’s cap rate meaningfully above Treasury and investment grade bond yields, given the tenant’s credit and lease term?
- Financing: does the loan constant leave cash flow you are comfortable with, and can you refinance at maturity if rates are higher?
- Your deadlines: a 1031 exchange has fixed 45-day and 180-day deadlines, so the decision is often which property, not when.
- Holding period: over a long hold, rent growth and the lease term matter more than small moves in entry cap rate.
- Credit: confirm the tenant’s current rating in the tenant ratings database.
Evaluating a Net Lease Purchase?
We can price a property against current listings and model the financing. On the majority of transactions, there is no separate fee to you as the buyer for representation; the listing broker pays a cooperating commission.
Frequently Asked Questions
Is now a good time to buy net lease property?
It depends on the property’s cap rate compared with Treasury and bond yields, your financing cost, and your holding period. The current median asking cap rate across the listings we track is 6.40%, and the 10-year Treasury yield is 5.24%.
Does a 6.5% cap rate with a 6% loan give positive leverage?
Only on an interest-only loan. With 25-year amortization, the loan constant is about 7.7%, so cash-on-cash return falls to about 4.7% on a 60% loan, though principal payments build equity.
What happened to interest rates after the Fed cut in 2024 and 2025?
The Fed cut to 3.50% to 3.75% by December 2025, but the 10-year Treasury yield, which drives cap rates and mortgage pricing, did not fall in step, ranging from 3.97% to 4.79% in 2025.
Educational content only. InvestmentGrade.com is a commercial real estate brokerage and educational publisher. We do not sell, broker, underwrite, or solicit any bonds, securities, or investment products. Yields, ratings, and prices referenced fluctuate continuously and are sourced from public market data as of the date noted. Nothing on this page constitutes investment advice, an offer to sell, or a solicitation to buy any security. Consult a licensed broker-dealer, registered investment advisor, or tax professional before making any investment decision. For SEC investor education, visit investor.gov.
