As a real estate investor, I know the importance of making smart choices when it comes to where to put my money. That’s why I have become a big advocate for NNN investments. In this article, I will explain what Triple Net Lease investments are, the benefits they offer, and how they compare to traditional real estate investments. I will also cover the different types of NNN leases, how to find Triple Net Lease investment properties, the risks associated with these investments, financing options, how to calculate returns, and provide some case studies. By the end of this article, you’ll understand why Triple Net Lease investments are the smartest choice for real estate investors.

 

What is NNN Investment?

NNN stands for “triple net,” which means that the tenant is responsible for paying all property taxes, insurance, and maintenance costs associated with the property. As an investor, this means that you don’t have to worry about any of those expenses. You simply collect the rent check each month and watch as your investment grows. NNN investments are typically long-term leases, with terms ranging from 10 to 25 years. These leases are also usually guaranteed by a corporate tenant, which provides added security for the investor.

Benefits of NNN Investment

One of the biggest benefits of NNN investments is the passive income they provide. As I mentioned earlier, you don’t have to worry about any of the expenses associated with the property. This means that you can sit back and collect your rent check each month without having to lift a finger. Another benefit is the potential for long-term appreciation. Because NNN leases are typically long-term, the property is more likely to increase in value over time. Additionally, NNN leases are typically guaranteed by a corporate tenant, which provides added security for the investor.

NNN Investment vs. traditional real estate investments

When comparing NNN investments to traditional real estate investments, there are a few key differences to consider. With traditional real estate investments, the investor is responsible for all of the expenses associated with the property, including property taxes, insurance, and maintenance costs. This can be a lot of work and can eat into the investor’s profits. With NNN investments, the tenant is responsible for those expenses, which means that the investor can sit back and collect passive income. Additionally, with traditional real estate investments, the investor is responsible for finding tenants and managing the property. With NNN investments, the investor doesn’t have to worry about any of that. The tenant is already in place and responsible for managing the property.

NNN Investment lease types

There are three main types of NNN leases: corporate, franchise, and individual. Corporate NNN leases are guaranteed by a corporate tenant, which provides added security for the investor. Franchise NNN leases are guaranteed by a franchisee, while individual NNN leases are guaranteed by an individual tenant. Corporate NNN leases are typically the most secure, while individual NNN leases are the least secure.

How to find NNN Investment properties

One of the best ways to find NNN investment properties is to work with a commercial real estate broker. These brokers specialize in commercial real estate and have access to properties that may not be listed on public websites. You can also search online for NNN investment properties. There are several websites that specialize in these types of properties, including LoopNet, CREXi, and Brevitas.

NNN Investment risks and how to mitigate them

Like any investment, there are risks associated with NNN investments. One of the biggest risks is the potential for the tenant to default on the lease. To mitigate this risk, it’s important to do your due diligence before investing in a property. This includes researching the tenant’s financials, credit history, and lease terms. It’s also a good idea to have a backup plan in case the tenant does default on the lease. Another risk to consider is the potential for the property to become obsolete. To mitigate this risk, it’s important to invest in properties that are in high demand and have a good location.

NNN Investment financing options

There are several financing options available for NNN investments, including traditional bank loans, SBA loans, and private lending. Traditional bank loans are the most common, but they can be difficult to obtain for NNN investments. SBA loans are another option, but they require a lot of paperwork and can take several months to obtain. Private lending is a good option for investors who need to close quickly or who can’t obtain traditional financing.

How to calculate NNN Investment returns

Calculating NNN investment returns is relatively simple. You’ll need to know the property’s net operating income (NOI), which is the property’s annual income minus expenses. From there, you can calculate the property’s cap rate, which is the NOI divided by the property’s value. The cap rate will give you an idea of how much income the property is generating compared to its value.

NNN Investment case studies

To give you a better idea of how NNN investments work in real life, let’s take a look at a couple of case studies. In the first case study, an investor purchased a NNN property for $1 million. The property had a 10-year lease with a corporate tenant and a cap rate of 7%. The property generated $70,000 in annual income. After 10 years, the investor sold the property for $1.5 million, for a total return of $1 million.

In the second case study, an investor purchased a NNN property for $2 million. The property had a 15-year lease with a corporate tenant and a cap rate of 6%. The property generated $120,000 in annual income. After 15 years, the investor sold the property for $3 million, for a total return of $2 million.

Conclusion

As you can see, NNN investments offer several benefits over traditional real estate investments. They provide passive income, long-term appreciation potential, and added security for the investor. However, like any investment, there are risks to consider. It’s important to do your due diligence before investing in a property and to have a backup plan in case the tenant defaults on the lease. If you’re interested in investing in NNN properties, be sure to work with a commercial real estate broker who specializes in these types of properties. With the right investment strategy, NNN investments can provide a stable and profitable source of passive income for years to come.