- March 16, 2018
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Commercial real estate is known to be a risky investment… to most people. However, if you have great brokers (cue Miss America Pageant waving from SVN | GLL agents), you’ll be guided toward a NNN investment. Here is a quick run down of NNN investments.
NNN (Triple Net) lease is a lease that ALL cost are passed onto tenants. So, you have a base lease rate and NNN charges. Your NNN charges include CAM (common area maintenance- think lawn care type things), taxes (yup your tenants pro rata share of the taxes for their space in YOUR building), insurance (again… your tenants pro rata share of the insurance for their building and maintenance (need your parking lot restriped? Great. Tack it on to the tenants next year maintenance cost.. pro rata share of course). Of course some charges like repainting or re striping the parking lot can only done every few years but you’re not paying for it completely. I mean, how much better does that get? That’s like bringing your friend to lunch and them not only covering lunch and beers but also covering your gas and insurance for the time there.
On top of your cost being covered by tenants, NNN investments (most of the time) come with long term secure tenants, rental increases and lease options. Still sounding great, right? Here some downfall though…
Short term, you’re not going to be rolling in cash and they are less liquid than other types of investments. Per any RE investment, your tenants can always go belly up for whatever reason. Don’t shy away though. Remember, we are in this for the long haul. Buy in the right area and you could flip it or hold on tight and make the long term profit on it.