Net Lease Investments New Year's Resolutions for You!!!!!
Many investors are looking for a safe place to put their money with the wild fluctuations in the financial market. Stable, predictable investment vehicles are increasingly hard to find, but smart investors do have choices. One of the better choices is to invest in single-tenant, net leased properties, which many investors also call a corporate bond combined with real estate investments that still make sense today.
Net lease investments work in both good and bad economic times for all walks of investors. Why is that? Net lease investments have long-term leases in place that can weather good times and bad with pre-existing rental rates built into the contract usually, some even with rent bumps. So as the owner of the property, you know exactly what is coming in month in and month out for the entire length of the agreement because you know the tenant. The investor then has a steady stream of income no matter what the real estate market or economy is doing.
You’ll find a variety of different people invest in NNN properties. They can be a wise move if you are in 1031 exchange situation and you to find your “like” property, maybe an investor wants to move out of their multifamily property into commercial property. Other types of investors that find net lease investments to be attractable are high net worth individuals or partnerships. Your typical instituational investor will also look at net lease investments for life insurance companies, REITs or pension fund.
Of course any investment has it’s risks, by having a high profile tenant as an occupier certainly reduces those versus a non-investment grade tenant. Risk also proves at sometime to provide higher returns, so there is something to think about regarding riskier signing a riskier tenant. Another risk that has to be brought up is “how leasable” the building is to a new tenant if the other tenant decides to vacate.
Investing in net lease investments can be a profitable venture if carefully thought out and executed. The investment grade tenants that can fill your property make it a lower risk without all the hassles of owning other types of real estate investments. When considering lease options as a landlord or tenant, the full terms of the lease should always be read before committing. In the case of a triple net lease, make sure that all the terms are clear and agreed upon by both parties.
Net lease investments work in both good and bad economic times for all walks of investors. Why is that? Net lease investments have long-term leases in place that can weather good times and bad with pre-existing rental rates built into the contract usually, some even with rent bumps. So as the owner of the property, you know exactly what is coming in month in and month out for the entire length of the agreement because you know the tenant. The investor then has a steady stream of income no matter what the real estate market or economy is doing.
You’ll find a variety of different people invest in NNN properties. They can be a wise move if you are in 1031 exchange situation and you to find your “like” property, maybe an investor wants to move out of their multifamily property into commercial property. Other types of investors that find net lease investments to be attractable are high net worth individuals or partnerships. Your typical instituational investor will also look at net lease investments for life insurance companies, REITs or pension fund.
Of course any investment has it’s risks, by having a high profile tenant as an occupier certainly reduces those versus a non-investment grade tenant. Risk also proves at sometime to provide higher returns, so there is something to think about regarding riskier signing a riskier tenant. Another risk that has to be brought up is “how leasable” the building is to a new tenant if the other tenant decides to vacate.
Investing in net lease investments can be a profitable venture if carefully thought out and executed. The investment grade tenants that can fill your property make it a lower risk without all the hassles of owning other types of real estate investments. When considering lease options as a landlord or tenant, the full terms of the lease should always be read before committing. In the case of a triple net lease, make sure that all the terms are clear and agreed upon by both parties.
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