NNN Properties, also known as triple net properties, is a commercial real estate where tenants pay for property taxes, insurance, and standard area maintenance other than the lease fee. Thus, the NNN lease put the burden of the unpredictability of tax, insurance, and maintenance cost are on the tenants instead of the property owner. It, therefore, means that NNN properties have no management liabilities, provide attractive financing and tax options, and offer stable cash flow. Below are the benefits of investing in NNN properties;
Predictability
The triple net lease structure is clear to the tenant and property owner upon signing the lease. Thus, when the two entities agree, both parties understand the lease terms for the entire period. Therefore, it becomes simple to know your rental income until the end of the time. Furthermore, rent increases are laid out in the agreement, and the tenant will agree. Thus, it provides a reliable and stable income stream as an investor guaranteed to happen barring a bankruptcy or default of the tenant.
Stability
In a long-term triple net lease, when using the investment-grade tenant, there is a small probability of default on a lease payment and contracted rent for the whole period. Hence, it becomes easier to establish your profitability of the lease and the ability to sell your property at a price that will return capital and profit. Moreover, an NNN lease usually spans a 10years or more lease period, which offers you a stable flow of rental payments. In addition, since they are situated in popular shopping areas, these leases are usually signed by the regional or national tenant, reducing the likelihood they may not pay rent.
Reduced Expenses
As a landlord, you do not need to worry about putting more time into maintenance efforts. The lease lets the tenants cater for insurance, maintenance, and taxes, leaving you with a reduced workload. Besides, it can be beneficial if you own other properties that require your full attention. It, therefore, means that you will be free from operating expenses and administrative duties, which can be tiring and time-consuming. Hence, it makes your property ownership simple due to no operating obligations.
Finally, you can easily get financed by major lenders. Moreover, banks love the stability of the assets and may be willing to invest in your project. Through analyzing the future cash flows, lenders can establish which investors can be liable for a loan. Lucking, with NNN lease, you have a steady and predictable income and reliable tenants. Therefore, triple net properties offer diversification advantages to investment portfolios.
