In NNN property investing, the investment works for you, rather than the other way round. Investors or families use NNN triple net real estate to seek steady, long-term income with passive management responsibilities. Further, Triple net transactions are hallmarked by single-tenant retail properties leased to stable tenants with high credit ratings. NNN transactions are optimal especially when used in conjunction with a 1031 Deferred Tax Exchange. we help to buying NNN investment property.
For example: a NNN triple net lease tenant pays all property operating expenses, property taxes, maintenance, utilities, repair and insurance premiums. The investor or landlord simply and easily collects monthly net rental income. That’s it.
NNN properties are bought and traded using a “CAP” or capitalization rate calculation. A CAP rate is a percentage rate which is calculated by dividing the tenant’s annual payment less landlord’s associated expenses by the buying price. Thus, the denominator (purchase price) is equally as important as the numerator, or net operating expenses – small fluctuations in either can cause a big swing in investor returns! CAP rates will differ and vary by geography, type of property, type of tenant, amongst a host of other factors, so great care must be taken in comparing investment properties prior to finalizing one.
NNN investment properties have either credit (low risk) or unrated (risky) tenants. Your investment’s success will hugely depend on the success of your tenant. So to rely on the income from a NNN property, be sure that the tenant is financially strong and can make timely rent payments. Investment grade credit tenants are best compared to speculative-grade rated or unrated tenants. Therefore vet for: strong financial guarantors of tenants and good financial performance. (Note that NNN leases provide highly beneficial, predictable rents and expenses that may be deductible by the tenant and landlord, albeit in different ways, for state and federal income tax purposes.)
NNN triple net leases are best vetted by expert lawyers who have decades of experience in NNN transactions. Typical NNN leases will define property type (fee simple or ground lease), lease structure (NNN, NN, N or variant), lease length, terms and options for both parties, rent escalations, parking clauses, tenant financial reporting, etc. and important addenda called CCR that contains the true “fine print”! (Tenants love ground lease properties because they minimize the tenant’s cost of development by removing land acquisition expenses.)
Other aspects to consider carefully include: weighing the risks and rewards of single tenant vs. multi-tenant properties, comparing lease rents and their escalations to the current (and future) local market rents for comparable properties, and adaptive reuse possibilities of property building structure.
NNN property investments get better, still. Using a 1031 tax exchange mechanism, investors can diversify, relocate, consolidate, trade up, or leverage their investments and not be charged capital gains or recapture (the sum deducted while owning a property is taxable if that property is sold). The taxes are postponed until the investor makes a non-1031 Exchange sale or until the property goes to the investor’s estate.
The 1031 “Starker” Tax exchange (1031 Exchange sale) is both a wealth-building instrument and a way of balancing triple net property investment portfolios to better reflect investor preferences. we help to buying NNN investment property.
For the best guidance on nationally available NNN property investments and 1031 Exchanges, please contact your relentless advisors at The Triple Net Investment Group, today.