The primary purpose of any investment is to generate profit and build equity, no matter what industry it falls within. While the real estate industry provides good ROI (return-on-investment) despite the numerous avenues available for investing, picking the right one can be very tricky as there are many good options present.
Nevertheless, commercial real estate continues to be one of the top picks of investors, amateurs, and experts alike. A lucrative way of investing in commercial real estate is through NNN properties, also known as triple net properties. Experts in the industry know the fantastic benefits of owning such properties, but not many novices do.
This article aims to show why investors love NNN properties and reasons to consider owning at least one such property. Appreciating NNN properties requires you to understand the complete concept; hence, we shall discuss some terms relating to the subject before we explain why such properties are eye-catchy.
NNN Properties: What Are They?
Experts in the real estate business are likely to be familiar with triple net properties and how to spot reliable NNN properties for sale; however, the same isn’t true for newbies who are practically unaware of the basis of the business. In that regard, there is a need to shed light on what NNN properties are.
A triple net or NNN property is one where the tenant bears responsibility for all operating expenses such as property taxes, maintenance costs, and insurance. Tenant under an NNN lease caters to these expenses while also paying the stipulated rent amount for the property to the landlord. The term “NNN” is an abbreviation for the phrase “net-net-net,” which signifies the three primary fees listed above.
Thus, the principal operating expenses of NNN properties besides rent are taxes, insurance, and maintenance. It’s worth noting that there are other properties similar to triple net properties – these are the single net and double net properties. However, they aren’t our focus in this article. Instead, we will dwell on the advantages of NNN properties and how to invest in commercial property.
Advantages of Owning Triple Net Commercial Real Estate
As a landlord of a triple net lease for sale, you stand to gain a lot from your investment, especially if its location is ideal. Benefits arise from steady cash flow and the reduction in cost, expenditure, and management. Below are some reasons why NNN properties are suitable for commercial real estate investments.
1. Reduction in Cost
Triple net property tenants require no assistance from their landlords regarding handling payments and expenditures relating to the building. As said earlier, the signed agreement empowers the tenant to be responsible for settling all property expenses such as taxes, building maintenance fees, and insurance, whatever the cost may be.
The arrangement reduces costs for the property owner, allowing them to invest their money in other ventures that will generate profit in the future. This factor is unarguably one of the most favorable advantages of triple net properties. Little wonder investors are rushing to find NNN real estate for sale.
2. Easy Management
While most commercial real estate properties are generally difficult to manage, the reverse is the case for NNN properties. With the mantle of management shifted over to the tenant, the landlord has no business worrying about the day-to-day running of the property. The only item of concern for the property owner is the rent – nothing else.
Since NNN property landlords spend no money on property taxes or other miscellaneous expenses, they’re more likely to be financially accountable, which is necessary for the success of any real estate investment.
3. Long-term Tenancy
Most tenants of triple net properties are well-recognized business franchises such as Arby’s and Bank of America, which have a strong market presence and require some form of locational credibility to build long-term relationships with clients. Hence, they’re prone to rent these properties for a long time. It’s thus little wonder that most NNN leases last for at least seven years.
4. Stability
Tenants of triple net lease properties are commonly investment grade, and they’re less likely to default on their lease agreements and payments. It makes the process of calculating the profitability of a lease easy. Unfortunately, the case is rarely the same with smaller tenants who have a higher probability of missing payments, especially during times of market downturn.
5. Predictability
A well-structured triple net lease agreement lays down the expectation of both parties and cements each person’s commitment to fulfilling their end of the bargain. Thus, it makes the contract simple and allows the landlord to know the profit margin at the end of every year. Overall, it provides a guaranteed income source for the investors no matter the economic situation.
6. Reliable Source of Income and Equity
It’s no news that NNN properties generate good income for investors, thanks to their desirable attributes. However, they also help investors build an incredible amount of equity due to the extended lease term and minimal responsibilities of the landlord. If the idea of building equity appeals to you, you can research reliable NNN properties for sale to start your journey to financial freedom.
Investing in Triple Net Properties: Steps to Take
NNN properties are great but don’t be in a rush to invest in them. Before heading into any investment, there are steps to take to ensure that you get the best out of it. The following are a few essential steps to follow before buying a lease property for sale.
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Understand What You Want From Your Investment
Most people enter into investment schemes head first without taking time to lay out what they plan to gain from the investment. It’s typical among first-time investors who are excited to get their hands dirty. Unfortunately, it’s the wrong move.
The first thing any potential investor ought to do before investing is to determine why they’re investing and what they want from the investment. Questions such as “What do I stand to gain if I invest” and “What is my motive for investing?” should already have answers before further action occurs.
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Find a Qualified Triple Net Advisor
No one knows it all in the real estate business. Even experts seek help from advisors from time to time, and so should you once you have decided on what to achieve. Specifically, seeking advice from a specialist in triple net properties as they are likely to have enough experience in the field.
The steps mentioned earlier are most crucial; however, others are also instrumental to your success. Those steps include raising capital, drafting your terms and conditions, and purchasing the right property.
Conclusion
NNN properties are great investments, and they’ll be so for a long time, probably because the benefits of investing in such properties far outweigh the cons. If you think that they’re the perfect form of real estate investment for you, kindly contact a renowned real estate agency like buynnnproperties.com to help you find reliable NNN properties for sale.
Salman is a prolific environmental writer, and has authored more than 500 articles in reputed journals, magazines and websites. He is proactively engaged in creating mass awareness on renewable energy, waste management, sustainability and conservation all over the world.
Salman can be reached on salman@cleantechloops.com
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