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.
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.
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.
SIG brokers handled a new loan for a recurring developer client who wanted to acquire a casual dining property as part of their investment portfolio, but the seller needed to wait 6 months to close on the deal for tax purposes.
When the goal is growing an investment portfolio with specific properties, you can’t trust a typical real estate agency to walk you through the process. SIG is a commercial real estate brokerage firm with a wealth of experience helping clients find, secure, and purchase properties to round out their investment portfolio.
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.
SIG brokers handled a new deal and loan for a recurring client by helping the developer secure financing quickly to compete successfully for a sought-after, big box retail location in South Carolina.
Working with SIG brokers is the best way for developers to acquire the highly sought-after, big box locations they want to add to their investment portfolios. Lead SIG broker Dan Hoogesteger, along with co-brokers, Andrew Chana and Chris Sands, successfully led one of SIG’s recurring clients through an acquisition of a big box retail location, up against multiple bids.
SIG brokers handled a 1031 Exchange deal for a recurring investor who wanted to acquire a fast food restaurant as part of their investment portfolio.
Working with SIG brokers is the best way to maximize opportunities during a portfolio acquisition of new properties and handle complex 1031 Exchange property transaction. Lead SIG broker Amanda Reeves, along with co-broker Doug Roland successfully led one of SIG’s private west coast clients through a 1031 Exchange deal to acquire a fast food property in Alabama.
Almost a decade ago, Chris Sands set out to create a different kind of brokerage firm: one that was built on honesty, integrity and fostered deep collaboration. Read more
SIG brokers handled a deal for a recurring investor who wanted to acquire a triple net property in the automotive niche for their portfolio.
Working with SIG brokers is the best way to successfully diversify your investment portfolio. Lead SIG broker Chris Sands, along with co-brokers Max Freedman and Dan Hoogesteger, successfully and quickly closed a deal on a non-traditional automotive retail location in Houston, Texas.
SIG brokers handled a new loan for a recurring developer client who wanted to acquire fast food property as part of their investment portfolio.
Working with SIG brokers is the best way to leverage top listings, lending, and marketing efforts. In this deal, lead SIG broker Max Freedman, along with co-brokers Chris Sands and Will Schuhmacher, was able to successfully find the right buyer in the first day of marketing the property. The transaction was seamless, with no delays or issues throughout the life of the transaction.
A modified gross lease can be best understood through comparison, as it represents a middle ground between a full-service gross lease and a triple net (NNN) lease.
In a gross lease, the property owner is financially responsible for the building, and covers all the expenses associated to 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 to the building, in exchange for a monthly, all-inclusive rent sum.
SIG broker handled an NNN property deal between a private seller and a private buyer who wanted to add multiple convenience stores to their portfolio in one transaction.
Working with a SIG net lease broker is the best way to maximize opportunity during a portfolio acquisition of new properties and handle complex, private, multi-location transactions. Lead SIG broker Josh Kim successfully led one of SIG’s private clients through a multi-location convenience store acquisition triple net lease in Texas.
There are many vital aspects to successfully navigating commercial real estate listings and finding the best fit for your investment strategies. Aside from price and cap rates, a key factor to consider is the type of lease that may already be in place on a property (which you’ll inherit as the new property owner). Lease types vary, and the unique details within each deal can also be very different from one property to another. Read more
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.
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.
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.
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.
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).