How to Identify NNN Lease Property with Strong Investment Potential

As you’re going through NNN listings, there are some key things you should be looking for that typically signal a solid investment with long-term profits and income, which include:

  • Geographical Location
  • NNN Property Location
  • Business Type

Geographical Location

The geographical location of a NNN property plays a large role in how much potential it has an investment. Growing cities and areas with population and economic booms taking place are the ideal market for NNN properties.

Some of the areas that are deemed high-growth in the market currently are:

  • Texas (Austin and San Antonio)
  • Idaho (Boise)
  • Utah (Salt Lake City)
  • Oregon (Portland)
  • Washington (Seattle)
  • California Metro Area

NNN Property Location

Location is always one of the most compelling factors of any real estate deal, and the same is certainly true for NNN lease properties. A building that has an easily accessible location, particularly on a corner with high traffic and proximal businesses to bring more people to the area is positive when evaluating a property.

Type of Business Operating at NNN Property

The type of business that will operate in a NNN lease location plays a large role in the long-term longevity of your investment. You’ll always want to ensure that you have a reliable tenant with a strong business background in any NNN lease you sign, but there are also certain business types that will consistently do well despite the economy, including:

  • Grocery Stores
  • Convenience Stores
  • Drug Stores
  • Discount or Dollar Stores
  • Medical Clinics

New Tenants

If you’re bringing a tenant into a property you own under a NNN lease agreement, then you can benefit from working with a net lease advisor to properly structure your lease according to your exact goals and specifications. You’ll also need to vet your prospective tenants carefully to ensure that they have reliable credit profiles, proven business success, and plans to operate a business in your property with longevity.

Existing Tenants

Frequently, when an investor comes in on a triple net property, there is already a tenant agreement in place that outlines all the deal specifics, including the tenant’s and property owner’s exact financial responsibilities.

By purchasing a property with an existing triple net lease in place, you inherit the terms of that deal as they’re outlined. This means that before you decide to purchase the property, you should pay very close attention to the terms of the existing lease in detail so that you know ahead of time if you will be responsible for any insurance premiums or major structural repair costs (which are often distributed between the landlord and tenant or are the responsibility of the property owner).

NNN Lease Advantages and Drawbacks

Triple net leases also offer property owners some other key advantages, like:

  • Long-term, trusted tenants who are invested in success
  • Little to no management, oversight, or “landlord duties” or property expenses
  • Investment stability
  • Equity building
  • Asset flexibility

While NNN leases are very beneficial to investors, they also offer tenants an array of advantages as well, including:

  • Established Business Location
  • Long-Lasting Footprint
  • Good Traffic and Proximal Anchor Tenants

NNN Lease Case Study: SIG Closes Transaction on Rare, Sought-After Grocery Portfolio

NNN lease properties that meet all the criteria for an excellent investment are highly sought-after commodities in the market. Sands Investment Group recently handled a “trophy” grocery portfolio, which offered guaranteed leases backed by a major corporation, prime real estate locations, and the opportunity for regular rent increases over the long-term leases.

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