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Why the STNL Train Keeps on Rolling

May 15, 2019: SANTA MONICA, CA—An economic expansion approaching the longest in history means greater prosperity, of course, but it also means more investors have a ticket to the commercial real estate game, especially one like the single-tenant net lease (STNL) sector that offers many benefits and relatively easy entry. GlobeSt.com spoke to Chris Sands, founder & CEO of Sands Investment Group, a national real estate brokerage firm specializing in net lease properties, to discuss private net lease investors, deal volume and the 1031 exchange driver.

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.

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.

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.