NNN lease deals offer a number of benefits to the property owner. Not only do they provide a secure monthly income, but they also free up the landlord’s time and money.
While a credit tenant NNN deal can provide a big boost in return, investors need to be careful when deciding whether this type of deal is right for them. They can also be susceptible to higher risk, if the tenant fails to pay rent or violates the terms of the contract.
Single tenant properties, on the other hand, are lower risk but lower in valuation. They tend to be priced between $900,000 and $1,600,000. These assets are also less levered. However, the upside from rapid rent increases is limited.
Triple net leased properties, on the other hand, are much easier to manage and offer a more stable income stream. They are becoming increasingly popular among commercial real estate investors.
Investors looking to invest in these assets must have good liquidity, as they can have a hard time filling vacancies. Furthermore, these investments require a low level of management. This makes them a good choice for retirees who are weary of having to handle the day-to-day management of a property.
Typically, single tenant properties can require a minimum of 22-27% equity. Similarly, credit tenants can have a minimum of 12%.
The market for these assets is expected to remain strong for the foreseeable future. However, the rising debt costs have industry experts monitoring their effects.
How to Find a Triple Net Lease for Sale
In the real estate world, a triple nnn lease for sale is an attractive investment option. Not only does it provide a stable cash flow, but it is also an opportunity to obtain financing. However, it does come with certain risks and challenges.
Investors must first understand how the market works before making a purchase. They must also learn about the property’s location, tenants, and quality of construction. These factors affect the value of the property and the likelihood of a tenant merger or bankruptcy. Moreover, if the building has been refurbished, its cost must be included in the analysis.
The most important piece of the NNN puzzle is the lease. This type of lease places most of the financial responsibilities on the tenant. It includes the tenant’s maintenance, utilities, and insurance. Some additional fees for operating expenses may be handed down at cost.
Another important feature of the NNN lease is its renewal options. If the tenant is not satisfied with the current lease, it can terminate the agreement. Alternatively, the landlord can sell the business on the open market.
The most common type of tenant is a fast-food restaurant or other service provider. These companies are likely to be credit-worthy. Top tenants include Wal-Mart (AA/Stable), CVS, and Home Depot.
Other tenants commonly found on NNN deals are cell phone service providers, fast-casual restaurants, automotive parts stores, and banks. While these tenants may be low-credit-rated, they are generally well-run companies with healthy profit margins.