Triple net (NNN) properties- the most alluring investment opportunities prevailing in the real estate market for boundless reasons. They give you a play-safe, no-risk investment, and you can also benefit from long-term passive income and low responsibilities. These commercial real estates are named triple net due to eradicating the 3 most commonly paid monthly expenses in addition to rent- maintenance, tax, and insurance.
Whether you end up putting them on a lease, rent, or sale, triple net properties can dynamically change your investment portfolio. In this article, you will learn the nits and grits of investing in these properties:
1. Know What Investment Returns You Are Interested In
The good news is that triple net leases and investments are not limited to one. With a whole and dynamic range of returns and a variety of opportunities, you can be the master of your game by choosing what works best for you. The risks and returns go hand in hand and are often dependent upon the type of tenant, lease terms and conditions, location, responsibilities, locations, construction period, and other relevant policies.
You can also find two investment opportunities with the same tenants and vastly different cap rates. The first step, thus, is to determine what returns make the most sense and work best for you. Determine a comprehensive and rigid range you want to stick to. For instance, don’t settle for a 6% cap for a target of 7% – you should find a plethora of opportunities with thorough market research. Before contacting a professional, it is always recommended to surf through the market and determine the current listings and price of what you are interested in. That brings you to the next tip.
2. Connect With A Reliable NNN Advisor
Entering the world of NNN can be daunting and overwhelming, leaving you not knowing where to begin. This is where professional triple net advisors come into play. Opening connections with professional advisors will provide expert teams at your disposal. You can gain customized portfolios that incorporate all your requirements and specifications. They are commercial real estate brokers with vast professional experience in this platform, and they will learn your preferences and find the ideal investment for successful returns. They provide the best NNN properties for sale, ensuring excellent opportunities. Retail is known to be the best opportunity for triple net investments after the pandemic isolation.
3. Be Rigid In Your Tenant And Term Criteria
Not all leases are the same, and the cap rates vary from the term criteria offered. The last thing you want is to know that the perfect cap opportunity has only 3-4 years remaining. Therefore it is crucial to set your tenants with an established credit rating, financial status, location, industry, etc. These factors can also determine the risk – a lease tenant with 7 locations has a higher risk than hundreds of locations with corporate guarantees.
Always opt for companies and industries that show them the balance and pay rent without strings attached. Opting for small franchises and businesses may not guarantee enough financial stability for on-time rent payments. Set your ideal tenant and term criteria for a narrowed-down search.
4. Be Confident In Your Offers
When investment opportunities are washing down on you, ensure you collect and organize the information in a safe space. Compare your opportunities against various factors, and shortlist as much as possible, as you will visit them in person. Having a sheet with everything in one place can make the reviewing process quicker for the teams, partners, and advisors. Once you have stumbled on the best one, draft the intent letter to purchase.
The most advantageous point in these investments is the low-risk medium-return prospect. They are perfect for retirement plans to have a reliable yet passive source of income. You are guaranteed returns for the long term, and it also gives you the adequate potential to build substantial equity. Moreover, unlike single or double nets, landlords are given minimal responsibilities and flexibility to invest however they like.