Grocery Stores For Sale: Finding the Best Opportunity

From medical offices to strip malls and everything in between, real estate investors are constantly looking for the next investment opportunity to expand their portfolios. There is no shortage of investment opportunities, after all, and nearly every industry needs dedicated investors to help them succeed especially when investing in businesses for sale. As an investor, growing your portfolio and seeing a profit on those investments is undoubtedly important to you. Finding the right investment is key to that success.

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How to Unlock Capital in Your Urgent Care Facility

Reflecting on one year into the COVID-19 pandemic in the United States, we’ve seen an acceleration of the medical sector’s already-booming market outlook, especially as it relates to urgent care facilities. Even before the pandemic, medical clinics were progressively popping up in retail strips and main shopping centers, and around busy commercial offices. Investors are seeking urgent care real estate as a growing sector with stable vehicles to safely invest their money.

Pre-pandemic urgent care facilities were primarily serving the general public for urgent and immediate care needs—however, in a post-pandemic world, research indicates that consumers will prioritize preventative wellness and urgent care centers will see an increase in visitors.

As a result, urgent care centers have come into the mainstream as a new opportunity for private equity, commercial real estate, and retail healthcare individuals. There are big opportunities for investors to take advantage of properties that lean into convenience for the community, especially when it comes to preventative care.

Community urgent care offices offer:

  • Convenient access to everyday shopping
  • A safer medical environment than hospitals
  • Shorter wait times than alternative care options
  • Lower patient costs than alternative care options

THE BENEFITS OF BUYING URGENT CARE REAL ESTATE

As the sector continues to grow and investors flock to medical offices and modern urgent care facilities, it’s important to understand the benefits as they relate to urgent care as a real estate investment.

  1. Urgent care is ecommerce-, recession-, and pandemic-proof

    As we’ve seen over the last 12 months, urgent care facilities have seen an increase in demand from the COVID-19 pandemic, and research indicates that this trend has staying power as preventative health becomes a priority for everyday consumers and the democracy of healthcare accelerates into communities. Check out Urgent Care facilities on the market.

  2. Urgent care provides a proven business model with a strong track record

    Healthcare will always be an essential service, and there will always be a demand for urgent care facilities for both medical emergencies and everyday healthcare needs. These facilities support the needs of their communities by offering accessible and convenient options for medical services.

  3. Urgent care centers incur high moving costs when switching facilities

    In many cases, urgent care centers provide specialized services with spaces built around specific equipment and providers. If an urgent care practice were to move, the tangible financial cost would be high, which prevents high tenant turnover. Urgent care clinics also typically serve a five-mile radius in surrounding neighborhoods, and the intangible financial cost of losing clients and credibility from a move would be incredibly high.

THE BENEFITS OF SELLING URGENT CARE REAL ESTATE

For owners looking to sell their urgent care businesses and properties, there are two ways a net lease advisor can help structure a deal that identifies the increased value of urgent care facilities, while structuring a transaction that works best for the operator in the long term.

  1. Unlock Capital with a Sale Leaseback

    A growing number of urgent care owner-operators are looking to structure a sale leaseback as a way to free up the maximum amount of equity in their property. A sale leaseback is a financing tool that allows an owner-operator to sell their real estate interests to a buyer while simultaneously signing a long-term lease to occupy the property as a tenant and secure the location.

    By separating the real estate from the core business, urgent care owner-operators can achieve significantly higher real estate values. Sale leasebacks provide flexibility in allowing owner-operators to sell their real estate while maintaining the freedom to partner their practice with a multi-unit operator down the line.

    With a sale leaseback, the owner-operator can pull out 100% of the equity to invest into another project while still controlling the core business. Oftentimes this capital is used to open additional practices, expand their current practice, or acquire another practice or real estate property.

    Sale leasebacks are being used across the healthcare industry and are starting to become more prevalent in the urgent care sector, demonstrating their numerous benefits.

  2.  Gain Benefits From a Long-Term NNN Lease 

    Many urgent care owner-operators have built up their practices by taking ownership of the real estate, then growing their practice within it—and oftentimes, they own both the real estate and the urgent care business itself. Because of this, owners are often surprised to learn that a sophisticated investor may value their building more than the standard real estate appraisal. When a multi-unit operator proposes to acquire an urgent care practice, they are solely focused on the business, not the real estate.

    However, investors are looking to add these businesses to their portfolios for the long term, so buying a practice from an urgent care operator while simultaneously signing a long-term lease has become an increasingly attractive option. These leases are usually NNN and are very marketable to outside investors.

About Sands Investment Group
Sands Investment Group has extensive experience in all types of commercial real estate and is an industry leader in the urgent care net lease investment space. We can help you navigate and advise you on how to leverage your existing assets in the current economic climate and create capital to fund your future investments.

With over 2,400 transactions in 48 states valued in excess of $5 billion since 2010, Sands Investment Group is the fastest growing net lease investment company in America. We provide highly personalized client services, employ innovative marketing techniques, and have access to an extensive network of investors to help you find the perfect investment or sell a property you own for the best profit. Call 844.4.SIG.NNN or send us an email to get started.

Investing in Shopping Centers For Sale

Shopping centers can be a great opportunity for commercial real estate investors. They offer variety in tenants, consistent income, and great potential for growth in the future. A shopping center can look very different, depending on the town or city, as well as the types of tenants the center tends to attract. Some may have a lot of chain stores, while others might have mostly local businesses. There may be a mix of retail, grocery stores, clothing stores, and furniture stores. Oftentimes, there can be many moving parts with shopping center investments, as there are usually multiple retail tenants to manage at any given time.

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Medical Office For Sale Investment Tips

Whether you have medical experience or are just interested in investing in medical offices because they can make a great long-term investment, medical office properties can be a great addition to any commercial real estate portfolio. There are so many different types of medical properties that can be an asset—from small offices for private practice to large medical buildings or complexes.

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Early Education NNN

Why You Should Consider a Childcare Asset for Your Next Net Lease Investment

In 2021, childcare assets are a product type to watch for commercial real estate investment opportunities. These assets are ideal additions to a net lease portfolio that provide long-term benefits and witness current growth as the industry bounces back from the COVID-19 pandemic. Childcare assets commonly provide long-term leases, corporate tenants with valuable reputations, strong operators, and—perhaps most importantly—owners who are highly committed to their businesses. These owners are passionate about their programs as they genuinely want to see children receive a quality education and care at their facilities.

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Restaurants for Sale: Making a Wise Investment

Restaurants have become popular investments in recent years as busy consumers choose to dine out more frequently—sometimes more than one meal a day. Examining the growth of the industry by its share of consumers’ food dollar and total sales is impressive. The restaurant industry’s share of the food dollar climbed from 25% in 1955 to 51% now, and total US sales have climbed 53% in the past decade to $899 billion, according to the National Restaurant Association. Currently, there are more than 1 million restaurant locations in the United States.

Nevertheless, the industry was negatively impacted by the COVID-19 pandemic that began in March 2020 and led to the closure of many restaurants due to temporary regulations that restricted inside dining. The restaurant industry’s total sales for 2020 were $240 billion less than the National Restaurant Association’s pre-pandemic forecast for the year. Also, more than 110,000 eating and drinking places were closed for business temporarily, or for permanently, as of December 1, 2020.

The pandemic was challenging for restaurants of all sizes, but the companies that fared better tended to be larger franchises that have outlets throughout the country and feature what is described as omnichannel platforms—restaurants that provide several ways for customers to order, pay, and get their meals. Today, consumers desire a consistent experience, no matter the sales channel they use.

Generally, fast food restaurants were able to pivot quickly and adapt to operating during the pandemic. Many fast food restaurants already featured drive-throughs and online ordering with contactless curbside carry-out.

Investing in Restaurants: The Basics

If you’re interested in investing in small restaurants for sale, buying an existing restaurant property can be an excellent option to become a restaurant owner. You can avoid the difficult early years of getting a restaurant off the ground. As with buying a restaurant franchise, you gain instant name recognition and a built-in customer base. Also, you do not have to create a business plan and menu from scratch. But, in a purchase, you inherit both the good and the bad, and it’s crucial to ask the right questions before investing in restaurant properties.

Questions to ask before purchasing a restaurant property:

1. Why Is the owner selling the restaurant?

This is the most critical question—why does the owner want to sell the restaurant if it is successful? Typically, two main reasons cause owners to sell:

  1. The owners may want to retire, or they may be weary of being their own bosses. Operating a restaurant is a tough job, and the long hours can take a toll. Health complications, family issues, or other personal problems may make some people decide to sell. If it is not working for the owners, you should be confident that you are ready to run it.
  2. They may not be making sufficient money to meet their costs and want to make the restaurant for sale sooner than later, before incurring a greater loss.

2. How are the restaurant’s financials?

Before you purchase a restaurant, you need to know if it will be a viable business. No matter how much you love that taco place or how successful it seems, you must carefully examine its financials along with the asking price. The due diligence will make you aware of any significant issues from the outset. In fact, if you plan to apply for a small business loan, you must create a detailed outline of the finances for your restaurant business plan.

You and your accountant must scrutinize all the financials, including profit and loss, cash flow statements, balance sheets, bank records, and tax history. Things you should look at include food and beverage sales (monthly and yearly), labor costs, food costs and check averages. Also, look at the cost of utilities, rent, insurance and taxes. Examine existing vendor contracts and the state of any assets (especially equipment) you will be purchasing. Look at the liabilities you would be taking on—to whom will you owe money, how much, and what are the monthly payments?

If an owner refuses to show you the books, do not proceed any further. Anyone serious about selling should provide an accurate picture of the financial health of their restaurant. The owner may ask you to sign a non-disclosure agreement stating that you will not share their information with any other parties.

3. Are There Any Tax Problems or Legal Issues?

Restaurant closures are often due to failure to pay sales or payroll taxes. These obligations compound quickly under government penalties, and you want to avoid these types of problems. Other legalities to look for: unpaid wages, customer lawsuits, back rent, health department citations, and more. It may be wise to hire an attorney to review all public records to avoid these issues.

4. How Is the Location?

Unless you are already familiar with the restaurant for sale, you should research the area and ask yourself several questions to help determine it’s value and fit within your portfolio. Questions including but not limited to: Is the location advantageous, is it located in a busy area? Is the restaurant in a shopping center or is it standalone? Is it visible enough to attract foot traffic and passing cars? Is there sufficient parking? What is the competition like nearby? Have new restaurants opened that might draw business away? What are the future terms of the lease?

Fast Food Restaurant For Sale Opportunities

A profitable way to invest in the restaurant niche is to select a quick-service restaurants AKA fast food restaurants for sale, with a triple net lease (NNN). Due to the great variety of fast food restaurants, investors can choose the property they want to invest in based on location, price, and brand. Choosing a name brand also eliminates the risk of a local restaurant having a poor reputation. There are several reasons why fast food restaurants that are available to buy make great NNN investments, including location, drive thru access, type of business and lease length.

There are more than 200,000 fast food restaurants in the US and, according to Brand Z rankings, and 2018 revenue for the top eight fast-food brands was $229 billion. Entrepreneur and QSR Magazine report that McDonald’s, Starbucks, and Subway are among the top fast food restaurant brands. They have continued to perform well during the pandemic with the advantage of drive thru service, making the industry an excellent place to invest. Fifty million Americans dine at a fast-food restaurant every day. Restaurants like McDonald’s, KFC, Wendy’s, and Starbucks are stable long-term net lease investments with reliable, creditworthy tenants, effortless monthly income, periodic rent increases for 10-15 years, and few or no maintenance responsibilities.

Many restaurant corporations depend on triple net (NNN) leases investors to expand and open new locations, which creates a profitable circumstance for both property owners and the fast-food corporations.

NNN real estate provide a bevy of benefits that enable buyers to continue to work, build a portfolio, or enjoy retirement. To make the most of those benefits, look for high-credit companies that choose total control over their properties and brand image without involvement from the landlord. You also want to make sure the investment provides:

  • Low-risk reliability/creditworthy tenant financials and reporting
  • Expense-free ownership with stable monthly income
  • Corporate-backed lease guarantee for 10-15 years with extension options
  • Rental increases during the lease term to offset inflation
  • Preservation of wealth and investment diversification
  • The chance to build equity over the lease term

1031 Exchange Investors and Restaurants

In addition to NNN investors, 1031 exchange investors are turning to restaurants as replacement properties because these asset types are easy to understand, and buyers like the familiarity with the brands and the ability to their favorite name brand. In addition, restaurants that are clearly growing are particularly attractive, especially since the typical price point (between $2-$3 million) is perfect for individual investors.

The triple net real estate experts at Sands Investment Group have helped investors close deals on many fast food restaurants, including various locations like:

  • Steak N’ Shake locations in Indiana and South Carolina
  • Starbucks outlets in California, Florida and Arkansas
  • Panera Bread locations in California, North Carolina and Virginia

The trusted advisors at Sands Investment Group can bring more to the table than simply identifying properties for you. We can help with existing real estate assets, acquiring new operators or businesses, developing new restaurants, and working to restructure leases to reduce your costs. We have handled one-off deals and acquisitions of multiple restaurant locations to help you obtain the right restaurant for your portfolio. If you have a different net lease property type in mind, we can help. We’ve handled deals on some of the most popular NNN business types including: car washes for sale, gas stations for sale, and many more.

For more information or to begin finding your next restaurant for sale investment, get in touch with Sands Investment Group experts. These advisors can help identify and secure a great opportunity for investment. Call 844.4.SIG.NNN or send us an email to get started.

Valero for Sale: Smart Investment Opportunities

Gas Stations for Sale: Smart Investment Opportunities

As investors look into new opportunities for triple net lease properties, one type of business that’s repeatedly mentioned is a gas station. The best types of commercial real estate leases involve relationships with businesses that are recession-proof, meaning they will always be needed regardless of the current economy. Therefore, gas stations are a smart investment opportunity to consider.

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Finding Commercial Real Estate in North Carolina

With its sandy beaches, rolling mountains, and bustling cities, North Carolina features natural beauty, culture, and industry such as furniture manufacturing in High Point and hi-tech in Raleigh, Durham and Chapel Hill, the research triangle region.

With a population close to 11 million, North Carolina is the 28th largest and 9th most populous U.S. state. Raleigh, the state capital, has a population of about 474,000 people (2.2 million for the entire triangle region), while Charlotte has 870,000 residents. However, recent data collected by the U.S. Census Bureau records that both urban areas rank among fastest-growing U.S. cities.

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How to Qualify For a Triple Net Lease

Triple net lease (NNN) properties are often very attractive to investors who are seeking out an investment with consistent, equity-building returns without having to be involved in the day-to-day obligations and financial responsibilities of the property. NNN leases are also structured over a long period of time (usually anywhere from 10-25 years) so they can be an opportunity for consistent, long-term earning potential from the investment standpoint.

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Car Wash Businesses For Sale: Are They a Good Investment?

Investor interest has recently grown in a popular new class of net lease investments: car wash properties. Demand for car wash businesses continues to grow due to the vast number of cars on U.S. roads. These businesses also have a considerable advantage over other many types of retail—the internet cannot put them out of business. In other words, the only way to wash a car is to drive to the local car wash.

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1031 Tax-Deferred Exchange Definition


For real estate investors, 1031 exchanges create an opportunity for investors to move from one property to another and provide tax benefits for doing so. With the help of a tax-deferred exchange company, you can sell one or more property and defer the payment of capital gain taxes by acquiring a replacement property. This allows you to keep 100 percent of your money working for you instead of paying about one-third that equity to taxes. However, in a 1031 tax deferred exchange, there are very specific requirements that need to be followed. 

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The Benefits of a 1031 Exchange Investment

When considering using a 1031 exchange for the sale of one property and the purchase of another, investors should consider the benefits they can gain from such a transaction. These 1031 exchanges are transactions that real estate investors often use to increase their wealth, save on taxes with the tax deferrals, and grow their portfolios. It’s a strategy that is used by many investors across the country.

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A Guide to Full Service Leases – NNN Investing

Investing in commercial real estate can bring about many advantages in the form of low-touch income or a diversified portfolio. But not all commercial leases are the same, and even leases of the same type can have varying factors and deal details. In short, every commercial lease is usually as unique as the property itself, so it’s very important that you understand all the particulars and fine print of any property you’re considering adding to your portfolio.

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Identifying the Best NNN Properties For Sale in Texas

NNN properties are a great way to add diversity to your portfolio, build equity, or add a low-risk, low-touch revenue stream that will pay consistent returns over a long time period. NNN properties are very popular with investors who want to get out of high-touch, high responsibility investments (such as apartment complexes) and into an investment that still generates income without all the time and monetary responsibilities that come along with being a landlord. 

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Bondable Lease in Triple Net Real Estate

Triple net leases, or NNN leases, are a very popular option for real estate. One type of NNN lease is a bondable lease. A bondable lease property has a long term tenant, of often ten years or more, with shared financial responsibilities between the landlord and tenant. Because of this, it can be advantageous for both property owner and business owner to have a bondable lease on the right property.

Many investors like adding NNN properties to their portfolios for the benefits offered for both the property owner and the tenants of the space. However, it’s important to understand the difference between triple net leases and bondable leases. While similar, there are some distinct differences that can be beneficial for landlords and tenants alike.

Read on to find out what a bondable lease is and the benefits in triple net real estate, for both landlords and tenants.

What is the Definition of Bondable Lease?

A bondable lease in triple net real estate is a variant of the NNN lease, in which the tenant carries the real estate risks and all operating costs for the property. These additional financial responsibilities may include:

  • Rental fees for the property
  • Property taxes
  • Insurance premiums
  • Maintenance and repairs for the property, including structure and roof

A bondable lease differs from a traditional NNN lease in that more of the financial responsibilities are placed on the tenant. In an NNN lease agreement, the structure, roof, plumbing and other costs may fall on the landlord; while in a bondable lease, it is on the tenant to take care of any issues that arise with these items. Another difference that can benefit the landlord is that often in a bondable lease, the tenant cannot terminate the agreement.

Considerations For Bondable Leases

When an investor looks into properties for a bondable lease agreement, there are many things to take into consideration, including the location and the tenant type. Once an investor has made a decision to offer bonded leases in the future, these specifics can help to narrow down the search for properties – and for tenants, in the future.

Location: A good, bondable triple net lease property, is often in a high growth area. These may be new cities, or areas attracting new residents at a higher rate. Popular parts of town, close to well established businesses, are often good bondable lease properties, as the area may be established with customers who can become customers at the new business.

Type of Business: When considering businesses to offer a bondable lease to, landlords should consider the longevity of the company. The best types of businesses for this lease type are ones not susceptible to economic or technological changes. These potential bondable lease examples may include grocery stores, convenience stores, dollar stores, medical offices, etc. These businesses are always necessary and will not shift too much during times of economic crisis.

Lease Terms: Each bondable lease will have its own terms, just like any other type of lease. Landlords need to consider the terms for their bondable lease, and ensure both they and the tenant understand what is expected in the terms. Because of the shared responsibilities, this understanding is especially important. Terms can include:

  • Division of financial responsibilities
  • Pass throughs of taxes and operating costs
  • NNN lease insurance policies and premiums
  • Rebuilding the structure if necessary (after hurricanes, tornadoes, etc.)
  • General maintenance coverage for structural or roof damage

The Benefits of Bondable Leases

There are a wide set of benefits associated with NNN bondable leases. Both the property owner and the tenant have several benefits they can find with this type of lease, making this an attractive option for both sides of the agreement. Landlords like the ease of this lease type, and tenants can find more freedom. Generally, both sides of the lease can find more freedom in this agreement than in other NNN leases.

4 Benefits For Landlords

  1. Consistent Occupancy: Triple net leases are usually long term (somewhere between 10 and 25 years), so landlords will know they have a consistent, reliable income stream for that property. This can help to reduce the time and money spent on searching for new tenants or letting properties sit empty for periods of time. The regular rent, without additional costs associated with the property, can give landlords more freedom from spending time on the bondable lease property.
  2. Fewer Responsibilities: With a bondable lease, landlords do not have as much responsibility as other types of leases. The responsibility for property taxes, insurance premiums and maintenance or repairs falls on the tenant. This gives the landlord more freedom and time to focus on other projects or properties.
  3. Predictable Cash Flow: Because of the consistent occupancy and the limited responsibilities landlords of bondable leases have, they can find a passive source of predictable income, allowing them to know how much money they will bring in each month for a set amount of time and freeing up their focus for new or other properties.
  4. Low Risk and High Return: NNN leases each have their own terms, but because most (if not all) of the risk is passed to the tenant, landlords often see these properties as low risk and high return. Again, the bondable lease property gives landlords the freedom to continue to add to their portfolios in other ways.

Each of the benefits a landlord finds can free up their time, money or energy to focus on new projects and other properties. This can help investors continue to grow their portfolios.

3 Benefits For Tenants

  1. Established Location: As a business owner, it can be challenging to have a shorter-term lease. With the long-term lease afforded by the bondable net lease, tenants can have an established location their customers can rely to be there for many years. This can give them the freedom and opportunity to grow a stronger customer base.
  2. Long-Lasting Footprint: With a stronger customer base at an established location, tenants can develop a long-lasting footprint in the area. They can focus more on building their business, rather than finding a new place to do business every few years. By creating a long-lasting footprint, tenants can grow their in-the-door traffic for their business, giving them the freedom to become a part of the community.
  3. Property Control: With a bondable lease in triple net real estate, the tenant is responsible for the property they are renting – which means they have more control than in other types of leases. If the tenant notices a maintenance issue, they can go ahead and get it repaired as they see fit, without needing to involve the landlord. This gives them the ability to fix issues as they arise and on their schedule, often resolving problems quicker than they may otherwise.

Tenants can find freedom to build their business and establish themselves in their community because of the longevity of their bondable lease.

Investing in Bonded Lease Properties

Once an investor has decided to invest in bonded lease properties, it can be helpful to do some research on the types of properties for the tenant types the landlord is interested in working with. A net lease real estate expert can help investors sift through the listings to find the best properties for their needs. They know the right questions to ask when looking at listings and how to decipher the fine print on existing leases. This will help the investor know what responsibilities they might inherit in a new property with an existing tenant.

A net lease advisor can help landlords understand the pros and cons of bondable leases. These experts know market trends and know the longevity of different types of investment locations that may be good for a bondable lease property. A bondable lease expert can help find the right property for ongoing, consistent income for property investors.

Sands Investment Group is America’s fastest growing net lease investment company, with over 2,200 transactions in 48 states (to the tune of $4.7 Billion) since 2010. Our experienced team of net lease advisors and brokers are experts in the NNN market and can help you find your next best investment opportunity by helping you navigate through all the opportunity and risk factors of every NNN property that meets your investment goals.

Want to learn more? Get in touch with an expert net lease advisor today by calling 844.4.SIG.NNN or sending us an email at info@SIGnnn.com.

Triple Net Costs: What to Expect

Triple net leases are popular options for landlords and tenants alike. They aren’t your standard commercial lease agreement. They give property owners a consistent income stream with more time to focus on other projects, as day to day maintenance is typically passed to the tenant. This gives the tenant more control over the property, allowing them to make repairs when needed and sometimes even update the property as they see fit for their business. The costs associated with the property are split up between landlord and tenant in a different way than most other leases.

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NNN Deals: Finding the Best Opportunities

Investors are often attracted to NNN leases, or triple net leases, because of the consistent income stream they can provide while still being a lower risk property. These types of leases are a long-term solution for tenants, while providing property owners with plenty of benefits as well.

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Find the Best Dollar Stores For Sale

Triple net lease (NNN) real estate offers investors a way to secure a consistent revenue stream without having to play all the traditional roles and take on the many obligations of being a landlord. In an NNN lease, the tenant at the property will typically cover the major operational expenses of the property as part of the business expenses. These costs covered by the tenant usually include property taxes, insurance, and maintenance or upkeep on the space theyre renting for their business. 

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Understanding NNN Financing and How it Works for You

If you’re looking for your next high-reward real estate investment, especially regarding commercial properties for lease, it’s important to understand what goes into financing a triple net lease property, otherwise known as NNN financing. NNN properties for sale are leased to a single tenant who takes on additional expenses beyond the usual rent and utility payments. These additional expenses include real estate taxes, maintenance and building insurance.

A lease of this type carries benefits and drawbacks for both the lessor and lessee. Let’s take a look at what triple net, or NNN, leasing is and what it can mean for your efforts before we get into financing.

What Is a NNN Lease?

Before we can look at NNN financing, it’s important to understand what a net lease is. In this form of commercial real estate lease, the tenant takes on the burden of some or all of the normal ownership and maintenance costs of the building. They may, in addition to rent, pay some of the taxes, repair and maintenance costs, or other fees associated with the property.

In a single net lease, for example, the tenant pays property taxes. With a double net lease, the tenant pays for property taxes and insurance. The triple net lease passes on the maximum level of expenses to the lessee.

An Overview of the Triple Net Lease

When a property owner offers a triple net commercial lease, the tenant takes on the additional responsibilities of property taxes, the cost of upkeep on the building and any insurance, as well as normal rent payments. This can save the building owner a great deal of money because the lessee is responsible for the same level of expenses as the owner might normally take on.

For the lessee, the rental costs are generally less than they would be otherwise. Essentially, the building owner passes on their savings in the form of reduced leasing costs. Such leases are also popular for business owners and operators for a number of reasons:

  • They tend to be for 10 or 15 years, with a controlled escalation of rent, which allows for long-term business operations.
  • They allow for the tenant to make whatever repairs or upkeep are needed without reliance upon landlord cooperation.

For investors, triple net properties also carry a range of benefits:

  • Investors receive a stable income over a long-term agreement.
  • The property in question will presumably appreciate in value at little to no cost to the owner.
  • There are no worries regarding management issues.
  • There are no concerns about filling vacancies.
  • Building improvement costs are nil, or close to it.
  • When a triple lease investment property is sold, capital can be rolled over into a 1031 exchange to save money to take advantage of tax deferment.

Low Risk, High Reward

If you’re looking to get into a property deal that carries a very low risk for a very high reward, it’s hard to beat a NNN lease property. Again, leases range from 10 to 15 years, or even as long as 25, so there’s stability in such a property. It’s governed by a single set of agreements, which means you don’t have to negotiate raises in rent, building improvements or other costs.

Hands-Off Management for a Single Renter

Again, you’re dealing with only a single tenant with this kind of lease deal, and they’re taking on all of the responsibilities of maintaining the property. That means you can be a completely hands-off landlord, stepping in only when there’s a major problem (such as the tenant failing to uphold their end of the agreement).

Steady Income with No Surprises

You can, through your lease property, enjoy a steady income with no surprises and relatively few headaches. After all, you don’t have to be concerned with paying out insurance or taxes, let alone upkeep, repairs and maintenance. All of that is taken care of by your tenant. In some ways, it can feel like easy money. There’s no such thing, of course, but a NNN lease can feel that way once it starts moving along.

Pay for Mortgage and Financing

The goal for just about any lease property is to cover your fees related to the mortgage and financing of the property. A NNN lease is ideal for this purpose. Working with a reputable triple net advisor can offer a number of different options for financing that can fund your purpose, and your lease agreement will immediately help to pay off those monthly regular costs.

NNN Financing

Buying a commercial real estate investment property of this sort has specific financial requirements. The investor has to have a minimum accredited net worth of $1 million. This excludes up to $200,000 in income or $300,000 if the purchasers are joint filing, or excluding the value of the filer’s primary home.

This can, of course, make it tricky for a smaller investor to take advantage of triple net lease properties. There are channels open to such smaller investors, however, including REITs, or real estate investment trusts, which are geared specifically toward NNN properties for sale. Here are a few more things you need to look for when considering financing NNN properties for sale.

Is the Tenant Credit or Non-Credit?

If your tenant holds an investment-grade rating from Fitch, Moody’s or Standard & Poor’s, or is a large publicly traded company, you’ll have a low risk when you buy the property, but you’ll also likely pay significantly more and get a far lower ROI when all is said and done.

On the other hand, a smaller independent business like a privately owned shop or restaurant is a higher risk because they’re not as financially stable. You will often, however, get the property at a lower price and get a greater return on your investment.

Get Up to Speed on Lease Agreements

When you buy net lease real estate, you’re almost always getting a property that is already occupied by a tenant. The property will come with a lease agreement. Make sure you understand how these lease agreements work. Look into the remaining lease term and any renewal options the tenant may have. Your loan will be directly related to the terms of that lease.

Put simply, for the most part the lender will offer a financing term on the NNN property for sale that is based on the remaining years. If there are five years left on the current lease, your loan term will likely be five years. If there are 10 years left, you can expect a 10-year loan. For the most part, lenders offer loans with terms of five, seven or 10 years.

Know Your Lenders

Financing NNN properties for sale usually involves either a federally insured bank or credit union, or a private lender. The best loan options usually come from federally insured institutions, which will offer the most competitive rates and the most favorable terms.

Private lenders are almost always more expensive. If, however, you’re facing a time crunch or are looking for a temporary loan financing solution, a private bridge loan can give you the time you need to negotiate a long-term lease while you seek to get better financing options from a bank or credit union.

Know Your Tenants

In the end, regardless of which institution you choose, the major factor will be as much tied to the credit rating of your tenant as it will be to your credit rating. The better your tenant’s credit rating is, the better your lease terms will be. This is largely because the lender is aware that you will be depending on the tenant’s rent and fees to pay your responsibilities to the bank. If the tenant has poor credit, that makes the sale a bad risk so finding the best NNN tenants is key.

Are triple net leases a good investment?

Absolutely, and we’re here to help  you through the process. Check out our complete guide on investing in triple net properties and what to look for.

Seek Expert Advice From SIG

If you need assistance with triple net financing your best bet is to seek expert advice and guidance. You’re making a massive investment when you purchase a single tenant net lease property, and you need to carefully consider a wide range of factors. Location is as important as it is with any commercial property for sale, as is the punishment it’s taken from prior tenants and the possibility for future use.

Working with the best team of skilled and experienced advisors, like those at Sands Investment Group, can provide you with the right financing guidance and support to avoid critical mistakes and ensure that the process goes as smoothly as possible. SIG has experience and knowledge in all forms of triple net properties for sale, along with the expertise to save you a great deal of hassle and hurdles in the process.

Sands Investment Group is America’s fastest-growing net lease investment company, with over 2,200 transactions in 48 states (to the tune of $4.7 billion) since 2010. Our experienced team of net lease advisors and brokers are experts in the NNN market and can help you find your next best investment opportunity by helping you navigate all the opportunity and risk factors of every NNN property that meets your investment goals.

Want to learn more? Get in touch with an expert net lease advisor today by calling 844.4.SIG.NNN or sending us an email at info@SIGnnn.com.

CAM Charges: What They Are & How to Manage Them

One of the biggest head-scratchers in commercial real estate leases are common area maintenance (CAM) charges or expenses. In a nutshell, common areas cost money to maintain and their upkeep is essential to the tenants that occupy the space and their customers. At the end of the year, the CAM charges are reconciled by the landlord and passed on to the tenant.

Let’s take a deeper dive into what CAM charges are, how they are calculated and managed, and who is responsible for the costs.

What Are Common Area Maintenance (CAM) Charges?

CAM charges are the costs of maintaining these common areas and are paid by tenants to landlords to help cover costs associated with overhead and operating expenses.

Tenants and landlords have different viewpoints when it comes to what should be included in the CAM section of a lease. For landlords, CAM expenses mean any and all expenses incurred by the landlord in order to maintain, repair, operate and manage the commercial property. But tenants see these common area maintenance charges in a broader sense as the upkeep of common spaces used by all tenants such as hallways, parking lots, public bathrooms, and building security.

What’s Included in CAM charges?

CAM charges depend on the property type (retail, commercial, office, industrial, etc.), tenant, type of lease (gross, modified, or net), and more. Here are some examples of typical operating expenses a landlord can incur and label as a common area maintenance charge and bill the tenant for:

  • Repair and maintenance of parking lots
  • Snow removal
  • Trash removal
  • Landscaping
  • Janitorial services
  • Pest control services
  • Security
  • Insurance
  • Real estate taxes
  • Center signage
  • Common area utilities
  • HVAC maintenance, and
  • Landlord’s administrative fees

The list covers a large variety of areas within the property, and depending on the space, it could have more CAM locations such as elevators, outdoor lighting, irrigation system, window washing, loading docks or delivery areas, sidewalks and driveway, renovations and other potential common area maintenance charges.

CAM charges can be hard to identify, so it’s important to ask your landlord the exact expenses included in your lease.

How Do You Calculate CAM Charges?

At the start of the year, the landlord will forecast the CAM expenses for the entire property and then divide the amount across the tenants in the building. Your percentage of CAM charges or pro-rata share will be calculated by dividing your square footage by the gross leasable area of the building. The total will be figured into your monthly operating expense so it can be paid throughout the year.

At the end of the year, the landlord will reconcile the actual CAM charges with the forecasted CAM cost and provide you with a statement. The statement will let you know if you have underpaid or overpaid, and you will either receive a credit or you will owe the difference.

For a triple net lease property owner, which we will discuss later in this article, the tenant pays for 100 percent of those charges as stated in the lease. Most of the time, NNN tenants are national franchises such as Walmart, CVS, Walgreens, Starbucks, and Family Dollar.

Can CAM Charges Be Negotiated? 

Simply put, yes. But there are a few things to consider. CAM charges can be divided into two categories – controllable and uncontrollable.

  • Uncontrollable expenses include things like utilities, taxes, and insurance.
  • Controllable expenses are pretty much everything else listed in the previous section. 

The good news is many controllable CAM expenses are negotiable depending on how efficiently the space is being managed. However, the property tax and insurance costs are not negotiable and fall under the uncontrollable category.

This is where having a good tenant representation broker is a must. The broker is often able to negotiate a cap on the percent that a landlord can increase the common area maintenance charges year-over-year.

There are two types of CAM caps – cumulative or non-cumulative.

Cumulative caps are preferred by landlords as it gives them the most flexibility in choosing what CAM charges will benefit their property.

For example, if the landlord and tenant agree to a 3 percent cumulative cap, and CAM expenses increase by 2 percent in the first year, then the tenant would pay the 2 percent increase. If CAM expenses increase by 4 percent in the second year, then the tenant would pay a 4 percent increase. This is because, in addition to the 3 percent cap, the landlord can recover the 1 percent increase that went unused in the first year.

Non-Cumulative caps are preferred by tenants as it allows them to budget and does not allow the landlord to recover any unused increases from the prior years. For example, if the landlord and tenant agree to a 3 percent non-cumulative cap, and the CAM expenses increase by 2 percent in the first year, then the tenant would pay the 2 percent increase. If the CAM expenses increase by 4 percent in the second year, then the tenant would pay for only the 3 percent increase.

Types of Leases For CAM Charges

There are several lease types and this can change up how CAM charges are written into the lease. Here are some of the common lease types and how operating and CAM costs are allocated.

Gross Lease: In a gross lease, the property owner is financially responsible for the building, and covers all the expenses associated with its operation (including taxes, insurance, and maintenance). To help recoup some of these costs, the property owner builds them into the monthly rent amount that a tenant pays for use of the building. The property owner pays all of the expenses associated with the building, in exchange for a monthly, all-inclusive rent sum.

Modified Gross Lease: In a modified gross lease, the tenant is responsible for some (but not all) of the operating expenses of the property but they still get to pay them as part of one monthly rent amount.

Net Lease or NNN lease: In a triple net lease, the tenant absorbs all of the operating expenses and property costs into their own business in addition to monthly rent payments, such as property taxes, insurance premium, maintenance, repairs and upkeep

Which Investment is Best When Dealing With CAM Charges?

NNN properties provide investors with a relatively low-risk (and very low touch) option for creating a consistent, long-term revenue stream.

Triple net properties are attractive to many investors because they offer reliable returns over time, with little to no landlord duties since the tenant is typically responsible for costs and responsibilities of successfully operating their business in the location. Triple net investments are also a great way to build equity and add diversity to an investment portfolio. As such, we’re seeing many investors looking to switch from high-touch property types (such as apartment complexes) to low-touch, consistent return NNN properties to add a line of passive income aligned with their investment strategies.

To sum up, a triple net investment is often considered a gold mine investment for those who don’t have the time to deal with property issues, want to avoid CAM charges, and filing property taxes, etc. But not all net lease properties offer the same type of investment opportunity. If you’re considering NNN investing, you should understand all the nuances of this type of real estate, so you choose the best option for your portfolio and overall investment goals.

Why It’s Important to Understand CAM Charges

Unfortunately, there’s no widespread agreement on what exactly CAM charges may include. And, the common area costs included in CAM charges section of a lease can vary from market to market and from one landlord to another.

For tenants, there are some strategies that you and your tenant representative broker can do to protect you from arbitrary CAM charges.

  • Research other buildings in the area and see how comparable their CAM charges are to the market
  • Ask the landlord for a CAM history
  • Negotiate the terms of your CAM 

Understanding CAM charges is one of the most difficult parts of negotiating a lease. CAM charges have a significant impact on the property’s NOI and the amount the tenant will pay to occupy the space. This is why it’s very important for CAM charges to be clearly defined in the lease before signing.

Sands Investment Group is America’s fastest growing net lease investment company, with over 2,200 transactions in 48 states (to the tune of $4.7 Billion) since 2010. Our experienced team of net lease advisors and brokers are experts in the NNN market and can help you find your next best investment opportunity by helping you navigate through all the opportunity and risk factors of every NNN property that meets your investment goals.

Want to learn more? Get in touch with an expert net lease advisor today by calling 844.4.SIG.NNN or sending us an email at info@SIGnnn.com.