For a prospective real estate investor, finding the best investment properties to invest in could be challenging. You’d have multiple investment options calling your attention from a broad range of asset varieties. However, NNN properties are one of the best investment options on the real estate market today—for several reasons. We’ll see the benefits of purchasing a triple net property for sale in California and how to choose the right one.
What’s a Triple Net (NNN) Property?
A triple net (NNN) lease is an agreement where the tenant bears responsibility for paying all the facility incurs. Such payments include tax payments, insurance premiums, maintenance and repair costs, etc. Note that these payments are irrespective of rent and utility fees on the property.
Because of the tenant liabilities on NNN properties, they’d make a highly viable passive income stream. They’re unlike your regular commercial real estate facilities, where the landlord has to spend money on general expenses.
However, to own an NNN property, an investor ought to have a net worth of at least $1 million. This required value is exclusive of the investor’s primary residence. Otherwise, the investor should have an income of $200,000. By now, if your net worth or income doesn’t meet the stipulated value, you’re probably wondering what you’re doing on this page. But hold on, you can still invest in NNN properties through real estate investment trusts (REITs).
Additionally, a triple net lease doesn’t have to involve only buildings or some physical structure. An NNN investor could consider a land lease, or a field lease, for a new tenant to build.
What Are the Advantages of NNN Investment Properties?
As we highlighted earlier, NNN properties are a highly reliable source of passive income over other real estate properties. Usually, NNN properties often last for ten years or more, providing a stable income stream over the long haul. Imagine receiving monthly rent for up to 20+ years! However, there are still more benefits that these properties offer to prospective investors.
Minimal Landlord Obligations or Liabilities
With any triple net property lease, the landlord never has to worry about tenant issues. The typical tenants in NNN properties are chain stores responsible for most property operating expenses, taxes, or insurance. Wouldn’t that be a pretty cool investment idea?
In Triple net properties for sale in California, landlords don’t have the usual real estate issues like mending pipes or servicing utility bills. And like with company shares, when you buy NNN units, you’d receive stable yields until the lease lapses.
Regular Real Estate Financial Perks
NNN lease investors enjoy similar financial benefits to other real estate industry investors, especially regarding taxes. They can access the usual real estate benefits like leverage or post-tax savings over facility depreciation. Investing in an NNN property is one sure-fire way to get substantial post-tax savings.
Also, financial institutions tend to favor NNN properties because of their predictable income streams. As a result, when you need financing for a triple net property sale in California, the risk premium would be narrower. It’s also easier to access credit to finance your portfolio.
Imagine that your tenants are NNN industry giants like Walgreens or CVS. These tenants have a high credit rating (BBB+) and are part of the best NNN properties to buy. And their positive credit ratings help investors access a broad scope of financing platforms.
Investors can only enjoy the benefits of triple net properties by selecting the best properties on the market. Following are some tips to guide you in making a wise decision.
Choose the Right Location
When considering a triple net lease for sale in Arizona, select NNN properties in an accessible location with viable traffic. It’d also help if nearby sites can draw customers and buyers to the physical location.
You also want to consider a location that’s in high demand by tenants. In that case, when your current tenant chooses to leave your facility, you can readily replace them.
Here are standard fixtures that could imply that your prospective NNN facility is in a good location:
- Convenience stores
- General retail stores
- Gas stations
- Pharmacies and groceries
- Auto repair businesses
What’s the Business Potential of the Facility?
The strength of brands that will stay in the property determines much of an NNN property’s value assessment and long-term potential. Consider a well-founded business that can survive different phases of national or global economics. Simply put, you want a “recession-proof” organization.
Get the Right Financing Solution
After determining that you’ve found a triple net property for sale in California in a good location, decide how you will finance it. For instance, do you want a loan from a financial institution? Or, are there other diverse ways of getting financing with reasonable interest rates. With proper research, you can get other creative tools for accessing finance.
Find a Strong Tenant
It’s not only vital to choose a property in the right location; the strength and good reputation of the tenant are also necessary. Remember that your tenant bears much responsibility in managing your facility. It’d help to find someone who can take care of that responsibility.
Where there’s already a tenant in the facility you’re considering, it’d help to review their history. Ensure that they have a good credit history and comply with tax and insurance expenditures.
Get Professional Advice From An NNN Lease Advisor
One of the dependable ways to get your investment smooth without any challenge is to get professional help from a NNN lease advisor. Doing so would make searching, choosing, and financing NNN properties much more accessible for new investors. They’d guide the investors in navigating the real estate market and better arrive at a good choice.
NNN properties are certainly suitable investments for growing wealth through a long-term stable passive income stream. However, when choosing an NNN property in California or elsewhere, gather sufficient information on the property before finally deciding. Also, consulting NNN property experts will help you ensure your investment objectives.