Investors are looking for more ways to make money work for them. While stocks, crypto, and regular real estate are fine, they need something with less responsibility and a steady income without frequent fluctuations.
Today, we’re going to talk about such a way to preserve your wealth.
A triple net lease is a great way to preserve and increase your wealth since you don’t have to pay certain taxes and additional expenses. The lessee agrees to cover all those costs along with basic rent.
This is the wonder of the NNN lease model.
Everything on the financial side is covered by the other part, including the insurance and maintenance. In a comparison with a regular lease, this is a win-win option for the landlord.
The regular agreement usually makes them responsible for all the ‘technical payments’, maybe except for utilities, depending on the agreement. So, if you want to invest once and make great use of your money, the NNN model is the most suitable. This is also the most common type, so you won’t need to explain it to the tenant before signing an agreement.
In this article, we’ll discover the benefits of the 3x net lease properties for wealth preservation, compare this option to single- and double-net leases, and help you decide whether it’s the option for you!
Triple Net Lease for Sale in Detail
This is the most common type of lease if we’re talking about commercial property (and we are).
The key points you need to know about are:
- This is the most responsibility-free option for investors;
- According to such an agreement, the basic rent should be lower, considering all the other expenses the tenant will have to pay for;
- The type is very popular among investors;
- These leases are usually long-term;
- There are more types of property lease, but they are less common.
The total sum of rent is calculated according to the capitalization rate. The rate, in its turn, is determined by the payability and reliability of the tenant.
Many beginners think it’s impossible to find tenants for such an agreement. To help you out, here are the best tenants you can find. Most will likely agree to your terms since the rent is usually lower, considering that there are additional payments.
Keep in mind that such leases are usually long-term (10-25 years or even more). The better the tenant, the longer the lease can continue. Usually, large market, restaurant, and other business chains are using this type of lease.
If you consider a long-term stable asset investment, this is the most stable and resellable yet.
Other Types of Lease
There are two other types, logically. They aren’t as common but worth mentioning. Remember that we’re talking about commercial real estate here. Leasing to store chains, diners, organizations, etc.
Double Net Lease (NN)
A double net lease is also quite common when it comes to commercial property. In this case, the tenant still pays most expenses, but not all. Along with the rent, which should also be lower since there are additional payments, they cover:
- Property taxes;
- Insurance.
Yours are the costs of space maintenance. This type of agreement has a heavier load of responsibilities. Besides, you’ll have to pay for the provided services directly. So, the process is more time-consuming.
Single Net Lease (N)
A single net lease isn’t as common as its sisters because the landlord has a lot of responsibility and quite a few additional expenses in this case. The tenant only covers the taxes.
The maintenance, utilities, insurance are all on you. This doesn’t sound like the best investment option. Unless you have reasons why the control should be yours, it’s better to try other options.
Investing in a net lease property
Investing in a net lease property is an excellent way to earn extra money. These are also known as residential properties. Investing in such kinds of properties is considered a smart investment choice for investors. To sell these net lease properties for sale, you have to get the right kind of property buyer who can purchase your property at a cheap rate.
Investing in a net lease property is like renting it out to someone else. The landlord then lets out the property to the tenant. Once the tenant is finished paying up the rent, he can then renew the lease and let the property owner have the option of renting it again. It is more popularly known as a turnover rental property. This type of business is widely practiced in many countries throughout the world.
Investors
Investors earn a certain amount of money from renting out their triple net lease for sale. They will get some rent from the property, and some of the rent will profit. The remaining part will be given to the property buyer. The amount of profit depends on the kind of property you are investing in and its location. Some properties are rented out based on the location and the area it is in.
Looking for net lease property
For example, looking for net lease property in Orlando, Florida, you can search for houses or apartments near the beach, restaurants, and shopping centers. Properties near the beach will always be cheaper than those located far away from the beach. The people who live near the beach generally spend a lot of time on the beach. On the other hand, properties that are far from the beach are not generally very cheap.
Planning
If you are planning on investing in net lease property in another state, you have to make sure that the laws in that state will favor you. You need to check on the minimum requirements for the property buyer. It would help if you also studied the market trend for the area to know about the possible rate changes. This will give you an idea of what the property is likely to appreciate in the future.
Become successful
You have to bear in mind that investing in net lease property requires a lot of patience and hard work. You will have to invest in many properties to gain a lot of experience. You also have to be willing to work hard so that you will become successful in this business. The process of leasing a property is not easy. In addition, you must also be prepared to put a lot of money into each property you buy.
Real estate industry
It would help if you also had a lot of contacts in the real estate industry. You will have to talk to many people to find out information regarding net lease properties for sale. This will help you determine which real estate agents are good at what they do. Although you may spend some time looking for information, you will still need to have an active role in the company.
