The commercial real estate industry allows investors to invest in commercial properties as one of the best passive ways to build wealth.
However, some properties involve so much that the investor may not have time to handle them. According to experts on signnn.com, NNN properties offer all investors an opportunity to earn passive income for years.
The NNN properties are a great investment opportunity that you can join since it offers stable cash flow for more than a decade. Investing in real estate is not always a walk in the park. However, you can partner with NNN property experts to help you out.
You should be keen on a few aspects when analyzing NNN properties whether it is your first time or not. It’s like buying kitchen property for the first time. You have to be keen. That is why you need to go through this article to learn about all the important factors to consider.
Rent Analysis
Yes, you should be able to carry out an analysis of future rental odds. You should perform the rent analysis right before getting into any NNN property. The current location and tenant might seem perfect for now, but you still should carry out a rent analysis.
This is because the rent analysis will help figure out the property’s potential. In addition, it will also protect you when a current tenant leaves your property.
The Perfect Lease Structure
NNN investments are passive income streams in which the lease should be an Absolute Triple Net Lease. The lease should outline that the owner of the property is free from any management roles, property tax, and utilities. As the investor, you are expected to keep a copy of the lease.
This copy should be obtained right before you get into a purchase and sale contract. The lease must also be reviewed by a commercial property attorney so that the liabilities of both the tenant and the landlord are well-evaluated.
Lease Term
NNN properties offer a reliable income stream from the rent obtained from the lease. If the term is short, the investor will earn passive income for a short period. Note that re-leasing the property might be expensive. Therefore, you should opt for long-term lease agreements. The best term would be ten years and above.
If you are buying an NNN lease property and the current tenant is expected to vacate or enter into a new lease contract, you may have to negotiate a price reduction. This is because re-leasing will be pricey.
Buy NNN property from a market you are familiar with
Do not worry. You can get help from real estate experts. It would be best if you leased with experts so that you can have a good knowledge of the market you intend to target. There are many factors to consider before investing in any market. You will need to consider aspects such as expected population growth, potential traffic, and demographics.
If you are familiar with the market you are analyzing; you will get a perfect property with the potential to increase in value. You should therefore gather as much information about the area as you can. Talk to the local businesses, read local magazines, ask professionals, and utilize online resources. All these sources can help you get a lot of useful details about the market. And the info will help you in making the best property choices.
Credit-worthiness of your Tenant
It is advisable to rent your property to tenants that are credit-worthy. It would be best if you were sure that the tenant could afford to pay the rent in ten years or so. Thus, make sure you look at all the tenant details before signing contracts. However, this is done after you have bought the property.
Location Matters
You should buy your NNN property in the right location. The property should be appealing to many tenants residing in the same location. Remember, commercial real estate relies on various factors, and location is one of them.
Buy property in areas with potential growth in terms of population and property value. If you buy your commercial property in less desirable markets, you may not earn as expected.
Partner with Experts
Property acquisition is not an easy task. It would be best if you never thought about navigating it single handedly. You should partner with the best legal firms in the area. The seasoned attorneys and real estate agents can help you collect details about the area. They will also offer legal services during the entire process.
For example, you should partner with experts in that field because you are looking to invest in NNN property. Not all real estate agents understand the NNN properties. Thus, it would be best if you only worked with agents and lawyers that have helped others invest in the NNN investment opportunities.
How do the NNN properties work?
The NNN properties work in a simple way. As the investor, you will enter into an agreement with a tenant called the lease. The lease lasts for 10, 15, or 20 years. The tenant will be paying the rent and still take care of other payments on the management of the property, taxes, and insurance.
As the investor, you will have nothing much to do. This is because the tenant is handling all the payments of the building except bookkeeping. This means that you will be required to do the bookkeeping. This is just a simple task that does not need much of your time.
Conclusion
As you navigate the NNN property investments, make sure you keep in mind the aspects described in this article. You should analyze the tenant’s rent potential, location, creditworthiness and have a perfect lease structure and lease term. However, the most crucial thing is partnering with NNN property experts. They will guide you throughout the process. Working with NNN property professionals makes it for you to make informed decisions. However, you will need to only work with experts who have a good track record, experience, reasonable costs, and a good reputation.
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