Top 10 FAQ by first time NNN investors

1. What does the term NNN actually mean?

Technically, the owners of such assets earn this income without being responsible for the three major expenses in such leases – repairs and maintenance for the tenanted premises, casualty, liability and other insurances, and real estate taxes. All these are borne entirely by the tenant, giving the owners an income “net” of each of these three major expenses – hence the term “triple net”.

2. What returns can investors expect from NNN investments?

We regard retail NNN assets to be best-in-class, and so for retail triple net lease properties, tenanted and guaranteed by national, investment grade tenants like Walmart, CVS, Starbucks, McDonalds, etc, investors can expect returns between 5-6% for long terms of 10-20 years.

3. How much capital, credit and annual income does an investor need to begin investing in an NNN lease?

Nowadays, to qualify for a NNN commercial loan, investors require a net worth of $1.0 million or more. Net lease investors may also qualify if their annual income is minimum $200K (or $300K if joint income). Investors will need to have liquid cash for a down payment of 25% – 45% of the loan’s total value.

4. How do investors finance NNN lease assets?

Broadly, loans tend to carry a lower interest rate on NNN properties with investment grade tenants. Currently, there are all manner of NNN lenders offering competitive interest rates, typically between 5.0–6.5%.

5. What are the risks of investing in net lease assets?

One possible risk of NNN leases is leasing to financially unstable tenants. Another may be investor perception that lower IRRs in NNN investing are not competitive, nor is the accompanying lower risk justified, causing premature and unprofitable exits. Yet another risk is taking on floating rather than fixed rate debt to fund an investment.

6. What corporate structures are ideal for owning net lease properties?

Typically, to avoid personal liability, triple net lease investors form a LLC, corporation or a non-LLC partnership.

7. Are NNN investment properties easy to sell?

If the fundamental reasons for purchasing the investment were solid, then making an exit should be easy as long a NNN broker of substantial reputation and networks acts as an advisor for the sale. Typically, sellers transition into other properties using the 1031 exchange to defer any capital gains taxes.

8. What tax benefits are available to investors in triple net lease properties?

Several tax opportunities, including the 1031 exchange, depreciation recapture and cost segregation depreciation can accelerate returns and put triple net assets on the same page as other stable, long-term investments

9. Can investors build wealth with NNN property investments? Since real estate forms the bedrock for these leases, the fundamental wealth-building virtues of real estate assets accrue to the owners, i.e. compounding returns (rents), inflation-hedged returns (rent escalations), long-terms (leases run 10-25 years) and “balloon” appreciation in the underlying real estate.

10. How do investors find good NNN deals?

To get a “good” deal, we encourage you to call the Triple Net Investment Group to get the right advice in this uncertain time of escalating interest rates. We know market cycles

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