The Best States for NNN Investing
There are several ways to invest in a triple net lease of real estate. For example, you can become a landlord, buy a property, or invest in a real estate investment trust or investment group.
To truly invest your real estate dollars, check out this list of the top 10 states created by GoBankingRates research.
The personal finance site calculated using Zillow’s data: the average home sale price in each state’s top three real estate markets and the annual increase in average home values for those markets. GOBankingRates also considers local purchasing power parity based on each state’s $100 value.
Every segment of NNN real estate in the U.S. recovered in 2021 after the pandemic shock. The overall price increase was 10%. Analysts at the Urban Land Institute research center predict a 7% price increase in 2022 and at least a 6% increase in 2023. Prospective U.S. commercial real estate in 2022 includes industrial properties, retail and warehouse space, and apartment buildings. Office space is expected to join the list of outsiders, with a projected 5% decline in value by the end of 2022. So what are the Best States for NNN Investing?
The state’s average NNN real estate prices are the lowest, and locals have strong purchasing power and reliable house value estimations. Additionally, a recent ranking gave Indiana’s inexpensive cost of living top scores.
The best buying power and the cheapest cost of living are found in Mississippi. Three of Mississippi’s most influential real estate markets, Jackson, Gulfport, and Hattiesburg, all have average home prices of $191,633. According to GOBankingRates, the average cost nationwide is $275,000.
Home values have increased by 13.5 percent, 15.6 percent, and 8.6 percent in Boise, Coeur d’Alene, and Idaho Falls, respectively. As a result, rents are rising, which is good news for NNN property owners, especially in the Boise region, where rental rates increased to $1400 in September 2018 from $1,150 in September 2016 (a 12% increase).
Alabama is another state with a cheap cost of living. However, Alabama’s purchasing power is comparable to Mississippi’s, where $100 is equivalent to $115.47 in Mississippi.
The Center for Economic Research ranks the state’s cost of living as the third quarter fourth highest in the nation. St. Louis, Kansas City, and Springfield, the three most important real estate markets, all reported median home prices of $202,900 and a rise in home values of 8.1 percent.
The average house price in Nashville, Memphis, and Knoxville—the three major NNN real estate markets in the state—is $251,133, and home prices have increased by 9.1% over the last year, one of the most significant increases in the research. In Tennessee, the cost of living is not very expensive.
Like many other southern states, Arkansas is seeing economic growth. According to the most recent Census Bureau statistics, the state’s population is slightly over 3 million. In addition, the Bureau of Economic Analysis reports that during the second quarter of 2015 and the second quarter of 2018, its GDP increased by 8.3 percent.
Ohio has demonstrated that it can diversify its economy even if local industry declines. Cincinnati, Cleveland, and Columbus, three of the largest NNN real estate markets, provide competitive pricing and substantial house value increases. Living expenses are lower than the national average.
From 2008 to 2009, the car sector constituted a significant component of Michigan’s economy. Since then, the state has been forced to diversify its economy, and some advancements have been made. For example, the distribution of employment in manufacturing, health and human services, retail, and education in Grand Rapids, a manufacturing city, has improved recently.
Recent economic development has been observed in certain southern states. Low taxes and a trained workforce characterize this region. Particularly in a city like Atlanta, where the average rent grew from $1,180 in September 2015 to $1,725 in September 2018, prospective investors can locate affordable homes to buy and rent.
U.S. real estate outlook in 2022 – essential considerations
The significant factors that have triggered demand for U.S. commercial properties will continue in 2022. These include:
the law of supply and demand.
Professional investors know well that not every facility can be highly profitable and with good prospects. Therefore, a lot depends on the segment. For example, in terms of apartment buildings, which got the most deals in 2021, and industrial buildings, NNN properties on the coast are in particular demand.
The hottest spots in the central United States in 2021 were Nashville, Tennessee, Florida, and Arizona – people are moving away from major metropolitan areas closer to the water and nature. However, this situation is observed in almost all countries, including the E.U. – residential real estate is now shifting focus to objects in quiet green areas, where you can access the necessary social infrastructure without a car or public transport (“everything on foot”). A similar trend is emerging in the U.S.
Top Most Important Factors for Investing in NNN Real Estate USA 2022
U.S. multifamily properties have recovered mainly from the pandemic, with demand returning to late 2019 levels. As a result, buyer interest has shifted toward the coast.
According to analysts and economists, U.S. industrial properties are the best investment option in NNN real estate. Moreover, it’s a leading market segment that will heat up even more in 2022.
Retail space is definitely in the outsiders – the crazy surge of e-commerce with online shopping has forced many conventional stores to simply close. But, most likely, by 2024, the big brands and businesses operating in large, well-known shopping centers that “survive.
Office space is a segment without a concrete future. Today it is difficult to predict the situation, but if the current trends persist, the number of offices will decrease by 15% by 2024. Therefore, it is possible to attract demand in this segment only by switching to the hybrid work of the majority of companies.
Public-private collaboration – with this kind of NNN work, U.S. real estate will gain traction in 2022, including through upgraded infrastructure. There is a shortage of housing for middle-class workers in the States. Investment is needed in roads and bridges to accelerate e-commerce delivery.
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