Benefits of a NNN Property as a Real Estate Investment

Benefits of a NNN Property as a Real Estate Investment

Real estate has a lot of options for you to make your space and be a property owner, or to get a commercial place on lease. There are many opportunities to start your business in a place with normal rent. Yes, commercial properties on a low-budget rent are possible to get through the net lease.

A net lease property is a real estate investment that allows you to put money into real estate without having to worry much about what’s going on inside the building. At the same time, your tenants are responsible for much of the work that goes into maintaining the property.

Net lease property as a real estate investment can be an excellent way to generate some income. These can be very beneficial to the landlord because they are considered “expenses” (which reduces the taxable income), but the property owner is not responsible for them.

As a real estate investor, you have the opportunity to use a net lease property as an investment to help diversify your investment portfolio. A net lease property is a property that is leased by the owner of the building to a tenant, who has all rights to use, occupy and possess the property. The tenant pays rent to the landlord to cover the mortgage payment and other costs associated with owning a building.

Net Lease World

Net lease property is the perfect real estate investment option for small investors who do not want to deal with the hassle of property management. The net lease world is a management company that handles everything from leasing, maintenance, and repairs. These properties are often located in high-traffic areas, making them ideal for businesses looking to be close to their customers.

Benefits of a Net Lease Property as a Real Estate Investment

Here are some of the benefits of a net lease property as a real estate investment.

  • Net lease properties typically generate stable, inflation-adjusted rents, which can help both investors and tenants.
  • Net lease properties often provide investors with inflation-adjusted cash flow that they can use for additional real estate investments or retire debt.
  • Net lease property can be bought as an investment, but it involves risk and it may not work. The risks include the fact that a net lease property may not produce enough income.
  • A net lease property can be owned in whole or in part by a partnership, corporation, trust, or other entity. Ownership by entities other than an individual may allow for greater leverage of assets and more diversification.
  • A net lease property may be sold to another net lease investor. A net lease property may be sold on terms that provide the seller with the income they expect from the property.
  • Net lease property may be sold to an end-user or user group. A net lease property may be sold to an end-user or user group that will use the property as tenants-in-common.
  • A net lease property may be sold on terms that provide the seller with a lump sum payment, or the seller may receive a monthly income, or the seller may receive both.
  • Net lease property may be owned by an entity whose sole function is to own, manage, and service the net lease property.

Why Real Estate Investment Investors Attracted To Net Release Property

Real estate investment trust (REIT) investors have been attracted to net lease property for several reasons.

  • Net lease property generates predictable, inflation-adjusted cash flow, which can be reinvested.
  • A net lease property has a long-term duration, which can help provide protection against inflation.
  • A net lease property usually has a long-term lease with a stable tenant, which can offer investors comfort. And the net lease property generates stable, inflation-adjusted rents.
  • Net lease property often has low leverage. Investors in net lease property types do not borrow capital to finance the real estate operation.
  • Instead, net lease property investors use the cash flow from the property to finance their real estate investment.
  • Investors can usually determine early on how much cash flow property will generate. They can use that information to decide what price they should pay for a property.
  • Investors usually want to minimize their costs. They prefer to pay lower rent and a higher percentage of gross sales to tenants than does most commercial leasing.
  • Investors also usually want to minimize their risks. They prefer to buy properties that are in expanding markets, or that are located in shopping centers that can draw tenants from nearby areas.

To get some property on net lease means the responsibility upon you is more than just paying for rent. Other charges may include property taxes, maintenance charges, and insurance, etc. based upon what type of net lease you have opted for. However, these are generally used in commercial properties.

It occurs in three forms that are single net lease, double net lease, and triple net lease. Divided on the basis of the additional charges, they serve the interests of different types of investors.

Why You Should Choose a Triple Net Lease? 

A triple net lease comes with more responsibilities and lower rent. You might be thinking there are a lot of other expenses too, right?

Yes, exactly there are but even counting all of them, you end up saving the sky touching rental payments. Well, that does come at a cost but that does not outweigh the benefits. Actually, with a triple net lease, the tenant is agreeing to a bigger responsibility and high risk. And its reward is that you have to pay lower rents and the contract is signed for a long term which is great from an investment point of view too. Moreover, when the rents rise, a very low difference occurs in the price of net lease properties. For instance, it rises for an average of 1 to 2 percent as compared to 3 percent of normal rent properties.

Thus, there are a lot of perks you are going to have at the cost of some responsibility. Good luck with your investment.