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Triple Net (NNN) Leased Properties for Investment
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In the previous sectionss we discussed how your clients could purchase real estate as an IRA investment and in subsequent sections we will discuss how they can defer capital gains taxes with 1031 exchanges, structured sales and private annuity trusts. Now let us take a brief look at one of the "hidden treasures" of real estate investment...the Absolute Triple Net Lease.
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| Triple Net (NNN) Leased Properties for Investment |
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Is your client interested in a secure real estate investment? An investment with all the benefits of investment real estate ownership, no property management responsibilties and a steady stream of passive income?
On your way to work, you pass a fairly new Walgreen, CVS or RiteAid drugstore. Or maybe, you shop at a WholeFoods or another supermarket chain. Perhaps you try to save money at a Dollar Store; service your car at a Goodyear, Firestone, or NTW; eat lunch at a Champps, Ruby Tuesday, etc.; buy your office supplies at Office Depot, Staples or Office Max; shop at a Wal-Mart, Target, Tractor Supply Company or Auto-Zone store... the list goes on and on.
However, have you ever stopped to think...who owns those properties? Certainly not many of the "brand name" companies whose logos are advertised on the buildings. Actually, they are long term tenants, but renters just the same. A vast majority of those properties are owned by individual real estate investors and have triple net (NNN) leases, acquired through direct purchase.
Your clients may not know about this exceptional investment option: The terms TRIPLE NET LEASE, TRIPLE-NET, NNN, NET LEASE, NET-NET-NET are interchangeable. The definition of a Triple Net Lease (commonly referred to as NNN) requires the tenant to pay all insurance, maintenance, and taxes. The tenant is also responsible for all normal expenses of ownership, leaving the owner free of day-to-day management responsibility and expense. Most commercial property NNN leases are often between 10-25 years and normally include several periodic rent increases. The rental payments continue for the full term of a NNN lease. The longevity of the lease makes the credit rating of the tenants very important, and that is why we are so meticulous in our selection process.
Consider the advantages of NNN-leased real estate investments.
NNN- Advantages Here are a few benefits of investing in an investment grade* property:
Relieves owners from day-to-day management issues, virtually affording the owner with no management responsibilities.
Steady income-stream paid and guaranteed by a corporate tenant.
An initial long-term lease, usually with several renewal option periods and rent escalations.
Renting to a corporate tenant with an established credit rating usually makes it easier to get a non recourse loan at favorable rates.
NNN properties may have appreciated residual values because they are most often built for retailers who have researched the market to find high density, good income areas with attractive traffic patterns.
*defined as having a tenant with a BBB or better credit rating by at least one of the rating agencies such as Moody's or Standard & Poors.
How Triple-Net-Leases align both tenant and landlord interests?
Many regional and national companies choose to lease their business property. Leasing the property gives the occupying companies the ability to control their physical environment without the financial commitment of ownership. By leasing the property, companies free up their corporate funds for business expansion and improvement.
NNN leased properties give the companies control over the property they occupy without the capital commitment of ownership. Corporations tend to invest in their primary business focus and leave the real estate to real estate investors.
The Laurel Group, never loses sight of the intrinsic value of the real estate in addition to the added value of the lease itself.
So,contact us to discuss the properties available currently for acquisition.
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Copyright © 2009 The Laurel Group of Prudential Fox & Roach, Douglas Elliman
and Carruthers Realtors. All Rights Reserved.
Prudential Fox & Roach, Douglas Elliman and Carruthers are independently owned
and operated members of the Prudential Real Estate Affiliates, Inc.
Please be aware that this website and the material contain therein is solely for informational purposes.
The views expressed are our opinions only and do not constitute legal, tax or investment advice.
Any person considering investment in, or changes to an IRA should obtain advice from independent
legal, tax, investment and other real estate professionals. Because no investment strategy is fool proof
The Laurel Group and Prudential Fox and Roach, Douglas Elliman, and Carruthers Realtors are not
responsible for any adverse consequences resulting from the use of any strategies contained in this
website and/or related material.
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