Advice for NNN investors with budgets greater than $20 million

In order to invest in triple lease investment properties, investors must be accredited and have a net worth of at least $1 million, excluding the value of their primary residence or $200,000 (300K if file taxes jointly) in income. Realistically however, to purchase desirable NNN properties, investor net worth should be closer to $3.0 MM and requires liquid funds of up to $1.0MM for a down payment.

When it comes to investing in commercial real estate, national, investment-grade tenants are best considered and selected. NNN lease structures eliminate landlord responsibility by assigning property insurance, maintenance, structural repairs, and most other property costs to the tenant. NNN properties imitate bond investments by providing predictable income, reliable cash flow, passivity in ROI and balloons in asset prices over 15-25 years. Investors can safely assume a 5.0% cap rate, turbocharged to upto a 10% CAGR using tax and depreciation factors.

High net worth accredited investors with acquisition budgets greater than $20.0 MM should consider the following:

 

Use Family Estates to fund Investments

Jointly under Sections 121 and 1031 of the IRS code, primary residences can be sold such that the capital gains are exempt to the extent of $500K, under certain conditions. These capital gains can be easily utilized to fund the purchase of NNN investment properties.

 

Diversification of assets

To achieve true diversification, NNN investors can conveniently apportion their NNN portfolio by geography, tenants, lease terms and cap rates to manage the risk/return trade-offs.

 

Accelerated depreciation

On the one hand accredited high net worth investors can use straight-line deprecation, a yearly 28-39 year direct obsolescence adjustment that can significantly increase returns by lowering taxes. Better and further, on building items such as lighting, hvac, etc, depreciation can be condensed to a period between 5-15 years, so that NNN  investors achieve tax benefits and increased cash flow on new acquistions or on an existing portfolio.

 

1031 Exchanges

After acquiring NNN property investors have the option to avoid capital gains taxes – forever – using section 1031 exchanges. Like kind exchanges into other NNN properties can effectively be become a source of “free” capital that can be used for new acquisitons or paying down debt, making improvements etc.

Our expert advisors bring the expert knowledge, deep research and industry networks guiding our high net worth clients with large acquisition budgets successfully to execute complex NNN transactions. We offer pre-transaction, high-level strategic advice to quickly and credibly navigate your investment goals. Call Robert Gamzeh at 202-365-3050 to begin a highly profitable conversation today.

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