Geographical Location Of A Nnn Property
To fully determine the potential in a triple net investment, you also need to study the state of geographical location. You want to look for areas with high-growth rates and steady population increases. If people are flocking to a particular area or city, then the opportunity for success in a NNN investment rises alongside those growth patterns.
Economic growth is another success indicator for NNN properties. If the area has positive employment rate increases and a healthy economy that is growing, then there will be a wider pool of consumers who want to visit stores, restaurants, and other shopping locations with more frequency and flexibility to spend.
In order to find the best possible location for a triple net property, youll want to keep two things in mind: tenant demand and the ability to replace tenants quickly. While the strength of the tenant in your building does play a key role in your ROI, location is still an important part in net leased real estate.
Youll want to invest in a triple net property thats located in a popular area with high NNN tenant demand. This way, whether your tenant does well or abandons ship youll be able to replace them quickly without any hiccups.
High-growth areas change over time, but currently we are seeing strong increases and great NNN investment potential in metropolitan markets, particularly in:
- Austin, TX
- California Metro Areas
Srs National Net Lease Group
The National Net Lease Group is the exclusive net lease capital markets platform within SRS, the largest solely retail property focused commercial real estate brokerage company in North America. The team has more than 50 brokers and staff located throughout the country operating under a singular platform with a multi-billion-dollar track record spanning 42 states. Transactions across the prior three-year period of large price point or specialized net leased properties include the $51,000,000 sale of Lifetime Fitness in Las Vegas, Nevada, the $24,000,000 sale of Home Depot in Spokane, Washington, the $21,000,000 sale of Lowes Home Improvement in Shippensburg, Pennsylvania, and the $19,000,000 sale of two CVS/pharmacys in Stanhope & Vernon, New Jersey and the sale of five L.A. Fitness locations in four separate markets valued at $49,000,000.
Is A Triple Net Lease A Good Idea
For both tenants and landlords, triple net leases can offer some benefits. A tenant has more freedom with their structure they can customize their space for more brand uniformity without the capital investment of a purchase. Another advantage is that these leases tend to be quite flexible: caps to tax increases, insurance increases, etc. For the landlord, triple net leases can be a reliable source of income and have very little overhead costs. The landlord also does not have to play an active role in the management of the property.
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To Generate Passive Income From Real Estate And Increase Your Roi You Have To Become An Informed Investor
But with residential real estate, theres a big problem
- Difficult tenants, unpredictable maintenance or repairs
- Unreliable property and asset managers
- Brokers that represent sellers and not the buyers interest
- What youve tried so far isnt working
- Youre losing money, and your income is unpredictable
NNN Lease Investment Opportunities are the Solution. Get your tailormade list of the most lucrative NNN Properties For Sale.
Triple Net Lease Example
Many large, multinational companies that want brand uniformity opt for triple net leases. Walgreens is one example of a company that frequently agrees to triple net lease agreements. In 2019, Walgreens was the second-largest U.S. pharmacy by total prescription revenue. Walgreens specializes in prescription drugs and convenience shopping for household items. Walgreens opts for 25-year triple net leases.
When a company opts for a triple net lease, they absolve the landlord from any financial or physical responsibility whatsoever. They do their own maintenance, use their own vendors, order their own signage, pay for operating expenses, and capital expenditures. However, by agreeing to triple net leases, Walgreens can have its pick of prime retail locations. Walgreens stores are typically in excellent locations1.5-acre lots on major corners in major retails areas.
Walgreens seeks out these corner locations for their premiere visibility. The company is considered an excellent tenant in the realm of triple net leases and a conservative investment for investors.
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What Is A Net Lease Investment
Have you ever sought a simple answer to the question what is a net lease investment? A net lease investment is an agreement that involves the tenant taking an expense in addition to the base rental rate.
In the absence of a net lease, the property owner is responsible for repairing, utility and operation, building insurance, real estate taxes, and maintenance. These expenses are grouped into nets real estate taxes, building insurance and maintenance.
However, in a net lease, a tenant takes some or all of the responsibilities in a net lease, compared to a gross lease they pay a fraction or all of the op/ex.
The Benefits Of Net Lease Investments
Investors looking for real estate investment without the obligations of actively managing property can benefit from the ownership of investment-grade triple-net lease property. In such arrangements, the real estate is leased to a high-credit tenant on a long-term lease, and the tenant bears all of the responsibility for the propertys operation, maintenance, taxes, repairs and improvements. As such, triple-net leases provide a way to own real estate without taking on the majority of maintenance and operational issues.
However, these transactions often have very short periods of time for due diligence and closing, and it is imperative to obtain qualified help. Our firm has significant experience representing both buyers and sellers in net lease considerations. We are skilled in negotiating leases and have developed a record of successfully closing transactions on expedited time frames.
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Why You Should Choose Triplenetleasecom For Your 1031 Exchange
With almost 50+billion dollar of closed investments and 150+ 1031 Exchange experts across the United States, our services have set a benchmark for the competitors in the 1031 Exchange arena. Each of our impaneled 1031 exchange experts is backed with years of experience and numerous recognitions. So you know, your investment is in safe hands. Not only this, but we also make sure that at least one of our experts stays with every investor throughout the transaction, guide them step-by-step. Whether youre low on equity or struggling to find a lender, we have a solution to all your problems.
Know Your Worth From The Beginning
First and foremost, before you invest in an NNN property and consider a lease rate, its important to know that investors in NNN property offerings have to be authorized with a net worth of $1 million at the least. This is, of course, without the value of your primary residence included. If you dont have a net worth of $1 million, you may still be able to invest if you have an annual income of $200,000.
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Everything You Need To Know About Investing In Triple Net Properties
- Introduction ePortfolios are a place to demonstrate your work. They are made of sections and pages. The list of sections are along the left side of the window . Each section can have multiple pages, shown on the right side of the window .
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Content is divided into subsections, which each have a dotted border. You can delete or edit the contents of a subsection by clicking the or icons at the top right corner of the subsection.
To add new subsections, find and click the type of content you want to add in the options list on the right side of the page .
What Are The Cons Of A Triple Net Lease
If there were no risk in commercial real estate, investors would reap no rewards. Vacancy risk is perhaps the gravest threat faced by landlords offering space on triple net leases. Vacancy can occur when a tenant moves out at the expiration of a lease and the landlord struggles to fill the vacated space, perhaps because overall market demand is weak, perhaps because of some shortcoming in the property itself. Vacancy risk also can occur when a tenants business model falls victim to broad disruptions in the tenants industry.
During the Great Recession, for instance, many office tenants in the financial, real estate and mortgage sectors fell on hard times and no longer could pay the rent, no matter how long they had prospered previously. And the retail sector has been beset by vacancies in recent years. Video stores have been vanquished by Netflix. Bookstores went mostly extinct amid Amazons rise. Music stores have all but disappeared. Theres a long list of once-expanding retailers that have been forced into major downsizings Borders, Circuit City, JCPenney, Kmart, Macys, Office Depot, Sears, Sports Authority, Virgin Music, to name a few.
Some simply move out when the lease is up. Others hit hard times so suddenly that they file for bankruptcy protection, and court-approved plans for reorganization typically involve the struggling tenant moving out and turning the space back to the landlord. The tenants empty bank account doesnt allow for rent payments.
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Real Estate Transactions To Reduce Your Taxes
Like-kind exchanges of real estate allow for taxes on the sale of investment real estate to be deferred. Simply put, these transactions offer property owners significant savings.
Yet like-kind exchanges can be difficult to enact. They require compliance with very specific rules, and must take place within a rigid time frame. The attorneys at Wiener and Wiener LLP have more than 60 years of experience representing property owners in these transactions we help our clients navigate the process and avoid missteps.
Call to discuss your unique circumstances in a confidential consultation. From offices in Allentown and West Palm Beach, we serve clients in both Pennsylvania and Florida.
Risks Of Nnn Investments For Real Estate Investors
NNN investment properties can be great long-term investments, but as with all investments, there are potential risks that are important to be aware of before you invest.
These types of NNN lease agreements are usually occupied by single tenants who require the property to meet specific requirements for their business. Grocery stores and coffee shops will have specialized interiors that may require a lot of upfront cost to renovate should you have to re-lease the property.
If the tenant does not renew the lease, you risk 100% vacancy for an undefined period of time. With only one tenant, the rent goes to zero and the owner becomes totally responsible for the taxes, insurance, and maintenance until the space can be filled.
The best way to minimize or prepare for this risk is to make sure you understand that it exists. If an investor does their homework and looks at the location of the NNN investment property, the long-term lease of most NNN leases and other factors, the risks may not be a concern.
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Cons For Triple Net Lease For Tenants
The cons of triple net lease revolve around the work necessary to organize, contract for, manage and pay each property vendor. For example, the tenant will need to hire a landscaper, repair company, find and compare insurance policies, and protest taxes. In addition, unexpected costs that may arise during the time of occupancy of a particular property. The two primary expenses that may fluctuate are:
- Tax Liabilities
- Maintenance Costs
When it comes to taxes, the tenant will be responsible for their liabilities, such as with fines, penalties, or other costs associated with incorrect declaration of taxes on the property.
When it comes to maintenance costs, there are always possibilities of items breaking or damage within the property. These can result in unforeseen repair costs that fall under the tenants responsibility per a triple net lease agreement.
Reonomy Property And Tenant Search
There are five noteworthy tabs to consider if youre using Reonomy to search and find NNN properties.
First and foremost, the Tenant tab is where you can add in filters to search for specific tenant types and tenant names.
Tenant type examples could be NAICS or SIC identifiers like Full Service Restaurants, or can be custom entries, such as simply entering restaurant.
Tenant names, of course, would be the business or franchise name of the tenant in any specific property.
If youd like to search specifically for a McDonalds, CVS, Dollar Tree, or anything alike, you can input that into the Tenant search bar.
You can also analyze any property you come across to see who the current tenants are .
Alongside your tenant search, you can add a number of other filters thatll help you narrow down your search to an exact location, or to a list of preferable locations.
The Asset Type tab lets you choose the type of property youre looking for. This includes office buildings, retail, industrial, as well as many sub-classes of each.
The Location tab is exactly what it sounds like, and lets you search for your preferred asset type within a specific state, city, MSA, county, zip code, neighborhood, on a specific street, or at an exact address.
The Building and Lot tab allows you to hone in on properties with a specific physical makeup.
Add filters for building and lot size, the year a building was built, number of units, and whether or not the property sits within an Opportunity Zone.
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Net Lease Investment Sales That Maximize Value With Certainty And Timely Execution
Demand for single-tenant net leased retail properties is at an all-time high making competition for these properties fierce. Investors in these properties value the passive income stream and the tendency of these properties to maintain their value in shifting markets. While buyers must stay ahead of the competition to procure the properties of their choice, sellers must focus on obtaining the best possible terms.
The SRS National Net Lease Group leverages SRS brokerage professionals across the U.S. who are primarily focused on retailer representation and institutional retail landlord representation. Our emphasis on teamwork and collective intelligence between capital markets and these landlord and tenant services, with a singular focus on retail, uniquely positions our firm against all others, by allowing us to deliver a greater level of depth and understanding of any retail submarket. We understand not only the dynamics of urban and suburban retail markets and premier streets, but also how, where, and why a retailer succeeds or fails, and the economics associated with those outcomes.
Find A Triple Net Lease Advisor
Once you have a general idea of what youre interested in, its best to open up conversations with triple net lease advisors to see who is a best fit for you and your team.
A triple net lease advisor is a commercial real estate broker or brokerage that has experience in the world of NNN investing, so theyll be able to help you find an ideal investment, perform your due diligence, and set you up for success.
When interviewing potential advisors, youll want to ask how much experience the broker has with these types of investments. Your average commercial broker wont necessarily be experienced in this field and residential real estate agents almost certainly wont be.
There are any number of nuances that come with commercial real estate investments that could trip you up or could potentially cause a missed opportunity, so its crucial that you have an experienced and knowledgeable advisor on your side.
On the hunt for an advisor? The Cauble Group has helped investors acquire NNN opportunities across the country. Get in contact with us here:
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The Ultimate Triple Net Lease Guide 2021
Triple net lease properties are one of the best available options for investors looking to generate solid capital returns from commercial real estate investments. In fact, commercial real estate investors have turned to triple net lease properties more frequently during the pandemic than before, as they offer higher yields than bonds and other similar investments. They provide investors with a good mix of steady income from tenants, as well as less hands-on responsibilities when it comes to taking care of the property itself. This trend of NNN properties is growing in all sectors of CRE, not just in the retail real estate market nationwide.
To help understand net leases and investing in net lease properties a bit more, we put together an Ultimate Guide to Triple Net Leases with essential definitions and more in-depth questions. Before diving into the specifics of what a Triple Net Lease is, the pros and cons of a Triple Net Lease, and details about Triple Net Lease properties, its important to illustrate what different types of leases exist in the first place.
