Every year, most people without knowing, make investments. However, to make tangible returns from one, the need to make the right investment is key.
But, it’s never smooth sailing as they’re loads of investment options in the market. Here, there are lots of considerations to make. Decisions like start-up capital, positive cash-flow, and long-term scalability, must be carefully reviewed and that’s what makes you an investor.
That said, if you’re still finding it daunting to pick an investment strategy that’ll work, you could just browse Walgreens NNN buildings. While these investments might seem alien to newbie investors, they’ve been around for a while now and are gaining traction due to their reliable income pathways.
Although every investor might be excited with this prospect, it’s never “easy peasy” all through as NNN leases, just like other investments, are risky across the board. Nevertheless, making investments in Walgreen NNN buildings might yield dividends if you keep to certain rules.
In this article, we’ll be giving an in-depth review about all there is to know about NNN properties, reasons to make investments, and some pros & cons associated with this investment variation.
NNN or Triple Net Leases: What Are They?
If someone showed you some Walgreens NNN buildings for the first time, chances are that you wouldn’t have an inkling about them. If you’re one of those individuals, you aren’t alone.
Triple Net leases, popularly known as NNN leases can be defined as a real estate investment agreement that’s signed between the owner (landlord) and a tenant.
While you might be buzzing to create your Walgreens real estate strategy with this definition, it’s worth noting that this isn’t your regular investment agreement. Here, all expenses relating to property maintenance are shouldered by the tenant, rather than the landlord.
Although there are other net lease agreements in real estate, Triple Net leases are considered the best as they have the capability of being the “cash cow” of a new and professional investor. Now, let’s take a look at some things that should be considered if you’re looking to invest in Triple Net properties
Triple Net Properties: Just Before You Make That Investment Decision
Although Triple Net investments might be a reliable source of income to all investors, the saying “look before you leap,” comes true here.
Just before you key into a Triple Net property, here are some things you’d like to consider. They include:
- Tenant’s Creditworthiness
Before you make that Triple Net property buy, this is one important point to consider. When you make an NNN investment, you’re looking to generate your start-up capital with the acquisition of rent.
Consequently, it’s imperative that you choose tenants that are credit worthy. Why? They’re bound to make rent payments on time, thus creating regular cash payments for you as the investor.
When making that tenant choice, it’s advisable to go with publicly traded companies rather than private entities. That said, although public organizations are preferred, they can still “go under” with negative market conditions.
So, if you have a Walgreens NNN for sale or lease, going through the tenant’s financial information and ensuring that all your requirements are met is non-negotiable.
- Location and Form of NNN Property
Although the tenant’s credit might come in as a focal point, the next most important point to consider when making a NNN property purchase is location.
Just like other real estate forms, the location of a Triple Net property is vital as it helps to boost market value in the long-term. For example, purchasing a property that’s located in an accessible and “easy to find” area is sure to yield huge dividends.
On the other hand, tenants might not like to enter lease agreements for properties that are somewhat hidden from the public populace.
Another thing that can be a determining factor is the property’s structure. If a property was a brewery or bottling company in times past, an intending tenant might be disinterested as modification expenses are expensive.
Here, it’ll be better to go with buildings that adopt a “grocery-shaped” form as they’re easier to re-lease.
- Lease Duration
Well, if you’re planning on going into Triple Net investments for a short period, you’re most likely to make short-term incomes. Typically, when a short-term lease expires, it’s hard to re-lease, since intending tenants might have reservations about the past lease agreement.
To ensure that leasing out NNN properties aren’t nagging issues anymore, you might want to go into this investment variation long-term. Here, periods of up to 10 years are advised as you’re certain of receiving a certain and stable cash-flow for the foreseeable future.
- Seek Legal Counsel
We live in a world where law and order is everything. Consequently, you’ll need to provide yourself with sufficient cover by seeking legal advice when buying NNN properties for sale in California.
With the right legal team by your side, you’re certain of purchasing a property that conforms to local laws and environmental regulations across the board. However, if you overlook this aspect, you might purchase a property with all manner of deficiencies.
Since property deficiencies can result in devaluation, seeking the services of a professional legal practitioner to aid you with everything from; agreements, titles, surveys, and lots more shouldn’t be a subject up for debate.
Also, a good lawyer will proffer advice that’s vital to avoiding pitfalls inherent during purchase.
Pros and Cons of Triple Net Properties: What Every Investor Should Know
Although the pros of Triple Net properties might stand out to investors, it’s also worth noting that everything isn’t that smooth as there are some bumps along the way.
Let’s take a look at the pros and cons of Triple Net properties. They are:
Pros
- The landlord (investor) doesn’t have to shoulder responsibility for expenses concerning property maintenance.
- Transferring NNN leases is an actual possibility. Here, you can get your accumulated interest even when there’s a lease agreement in place without hassles.
- NNN leases are a source of reliable income. As long as rents are paid on time, you have a regular income pathway.
- You can seek long-term leases. Here, you can lease out a property for as long as 25 years or more.
Cons
- Rental dividends are capped. As an investor, you’re bound to the lease and you can only make more rental income in cases of a re-lease.
- Finding a tenant can be daunting most times. After an active lease ends, you might need to provide mouth-watering incentives to lure intending tenants.
- Although the bulk of maintenance falls to the tenant, you’re responsible for everything at the end of the day. For instance, if your tenant decides to skip taxes, you’re held accountable.
Final Thoughts
Triple Net leases are touted as lucrative forms of investments. However, if you’re looking to make the most out of them, you’ll have to make some well thought considerations and decisions.
Although NNN properties might seem to have just positives, it’s crucial to note that there are some negatives in the mix.
That said, if you want to get the “NNN investment” ball rolling with Walgreen NNN buildings, you might want to visit buynnnproperties.com for a comprehensive list.