Investing 101 Archives | Page 6 of 7 | Sands Investment Group

What to Look For in a NNN Walgreens For Sale

Walgreens and other drug and convenience stores are highly sought-after in the NNN market. That’s because Walgreens sign long-term leases for their pharmacies and meet all the city location and traffic criteria that define profitable triple net properties for sale with long-term potential. The brand is recognizable and trusted by many consumers, and even in economic downtimes or a pandemic, people still need necessities, medicine, virus tests, vaccinations, and flu shots offered by pharmacies such as Walgreens.

What is an Industrial Gross Lease?

An industrial gross lease (also called a modified gross lease in some markets) is a type of commercial real estate contract that is often used to create a mutually beneficial deal between the property owner and the tenant on an industrial or warehouse property. In an industrial gross lease, the tenant is responsible for some (but not all) of the operating expenses of the property, which they pay to the property owner in addition to their agreed upon monthly rent.

What is a Double Net Lease?

Net lease real estate is rich in opportunity for both property owners (who can obtain a steady income steam on their investment) and the tenants (who occupy a space where they run their business). There are different variations of net lease deals, in which the tenant and the property owner will each have different financial responsibilities for the property. These various net lease deal types typically fall into one of three categories, which, in order of popularity, are: Triple Net (NNN) Lease, Double Net Lease, and Single Net Lease.

4 Things to Know About Triple Net Rent

Triple net lease real estate is popular among investors who want to create a stable income stream from regular, triple net rent in their portfolio. Triple net leases typically offer such an opportunity by providing long-term earning potential without the obligations that typically come along with being a landlord, such as taxes, insurance, or maintenance on the building to keep it in top operational order.

What is a Modified Net Lease?

A modified net lease is a deal variation or compromise that usually falls somewhere between the terms of a gross lease and a triple net lease. Each modified net lease contract is unique to the property, but there is generally a split of financial responsibilities between the property owner and the tenant to make the deal beneficial on both sides.

Double Net Lease Vs. Triple Net Lease

When you’re comparing different net lease properties for sale, an important aspect you should consider is the type of net lease agreement in place with existing tenants (or what type of lease will benefit you most on a new property with new tenants).

Why Do a Triple Net Lease?

A triple net lease (or NNN lease) property is a special type of investment property that typically comes with a long-standing tenant agreement in place with terms that are favorable for both investors and tenants in the long-term.

What You Should Know About Net Lease CAP Rates

Net lease capitalization rate (which is popularly shortened to simply, net lease cap rate) is a calculation used to measure the expected investment return on a net lease property investment. Cap rate is expressed as a percentage and is used to demonstrate how much of a return that an investor can expect on a net lease property, specifically over the first year of ownership.

3 Reasons to Avoid NNN For Sale by Owner Properties

As an investor you’re keen on finding the best investment, and to find that perfect deal you need to locate a property whose price fits into your goals. NNN for sale by owner listings can be tempting when you’re looking for a high return investment, and in some aspects of real estate can be great deals without all the fees that come along with working with a realty or investment advisory. If you’re dealing in cash, you can often get prices even lower and close faster dealing directly with an owner.

However, when it comes to triple net properties, the market and the variance in the lease deals in place on a property can present some unique intricacies that are hard to navigate (or easier to miss) when working the for sale by owner route.

Single Tenant Net Lease Valuation Model

Triple net lease real estate is popular among commercial investors who are looking for properties that are relatively low-risk but offer high returns without a substantial amount of management or oversight as a landlord.

Single tenant net lease properties can be ideal investors with these investment qualifications, because you’re dealing with one property, one long-term tenant (of anywhere from 10 to 25 years depending on the lease) and one set of agreement stipulations between you and the tenant. Multi-tenant net leases, however, tend to more complex since you’ll be dealing with multiple tenants who will potentially all have different terms (and timeframes) outlined in their leases.

4 Trends Driving Triple Net Lease CAP Rates

The Capitalization Rate (or Cap Rate) is a term used heavily in the triple net lease real estate industry, and this calculation (expressed as a percentage) demonstrates the expected rate of return on a real estate investment. Cap rates are determined based on the net income a property is anticipated to generate and give investors an idea of how lucrative a triple net investment is compared to others on the market.

How Does a Triple Net Lease Work?

Net lease real estate offers great benefits for investors and tenants alike, and as you’re researching your commercial investment opportunities, you’re probably coming across a lot of different net lease types that you may have thought were all virtually the same, but the truth is that the type of net lease in place on an investment property actually plays a big role in what types of returns you can expect and what financial obligations you’ll have as the property owner.

What Does the Landlord Pay in a Triple Net Lease?

Triple net properties are quite attractive to investors who want a steady, predictable income stream (that is also low-risk, low-touch, and long-term). This is because, in general, the vast majority of the financial responsibilities hinged to the building itself are passed along to the tenant in an NNN lease.

5 Advantages of Single Tenant Net Lease Financing

Single tenant net lease properties are freestanding business locations that have just one tenant occupying the entire space. In contrast, multi-tenant properties (such as strip malls or shopping centers) have multiple spaces that are all occupied by different businesses. Single net leases are becoming a more a popular investment choice as the popularity of malls dwindles and due to the many perks they offer for an investor (and a tenant who gets to be the sole business and brand operating in the building).

4 Things to Know about the Single Tenant Net Lease Market

Market shifts and changes can have a drastic impact on your triple net property investments. From what types of buildings and businesses will be most stable and lucrative, to when and where to buy an NNN building for your portfolio, you should keep a keen eye on the market trends that are unfolding.

There are some big things underway in the realm of single tenant net leases, but trends can often be difficult to navigate as you try to determine which will be fleeting and which could have longer-lasting impacts on your NNN investments.

What Is a Net Lease Advisor?

Triple net lease real estate can be a very stable, long-term source of reliable income with many advantages for both property owners and tenants. However, it can also often be an overwhelming task to find the perfect triple net property and determine the best opportunity among a sea of choices. Additionally, net lease properties can come with a tenant already in place, which means there will be contract details that you need to understand fully so you know exactly what financial responsibilities you’re signing up for by purchasing the property and entering the existing net lease agreement with the tenant.

4 Things to Know about Triple Net Lease Tenant Improvements

Triple net lease properties are rich in opportunity for both property owners and tenants alike. As an investor, you can create a reliable income stream from your property, and as a tenant you can establish a footprint for your business.

However, there are going to be expenses associated to maintaining your triple net property, from standard operating expenses to structural repairs to keep the building updated, safe, and profitable.

Triple Net Lease Insurance: What’s Covered (and What’s Not)?

Insuring your triple net lease property is an important component of protecting your investment. While insurance is a known necessity for any type of property, there are some added complexities to commercial buildings that you need to understand so you can properly negotiate your tenant contracts and avoid the profit-stealing scenario of learning you’re not covered for something that’s happened to or on your property, only after the fact.

What Should You Know about Commercial Lease Escalation Rates?

Commercial real estate contracts typically include detailed lease escalation clauses and rates that outline how and when increases to rent or operating costs will occur (and how both the property owner and the tenant are impacted as a result).

While the presence of lease escalations is very common in commercial agreements, there are many variables to how each escalation will work and what types of rate increases, or reductions will apply. It’s important to understand the different types of lease escalations and know exactly what each will ultimately mean for the profitability of your investment in the short- and long-term because some escalations take place annually, while others are every couple of years or at the beginning of a new lease term.

What Is an Absolute NNN Ground Lease?

As an investor interested in commercial property for lease, you probably already understand some of the types of commercial lease opportunities available to you on existing buildings, such as triple net (NNN) leases and absolute NNN leases. However, there is another route you can consider when scoping out absolute NNN properties for sale, which can be more advantageous for conservative, long-term return investments: an absolute NNN ground lease.