Is a Triple-Net (NNN) right for you?
At Diversified Investment Strategies, we are a comprehensive team who can help you learn more about your 1031 exchange options as a real estate investor. We can also help you through the entire transaction if we find that an exchange is the right fit for you and your needs!
A 1031 exchange is a great plan for an investor who is tired of toilets, trash and difficult tenants. We understand that you are ready for less work, but that you’re not ready to pay taxes on your highly appreciated real estate assets!
You may have lots of options for what to do next, and one of those options that we’d like to fill you in on today is a Triple-Net (NNN). This is an excellent option for someone with highly appreciated assets, who is ready for a break from hard labor.
This type of ‘passive’ ownership may require a greater financial investment right off the bat, but this can ensure that you receive a strong tenant. Rather than owning an apartment building, you might receive a tenant such as a CVS or Walgreens. The tenant could also be an office building, shopping mall, industrial park or buildings operated by banks or restaurants.
This will provide you with consistent cash without the toilets, trash and tenants to worry about. Here is a list of some of the perks to expect with a Triple-Net (NNN):
- Little, if any, labor requirements
- Consistent cash flow
- Class “A” tenants
- Long-term leases
- DST or 721 UP-REIT possibilities with greater diversification
With a class “A” tenant in a NNN lease, the tenant is responsible for insurance, utilities, taxes, maintenance and rent. You enjoy a high-level income while the building is maintained by the tenant!
Typical leases last 15 to 20 years, but many well-known retail companies may choose to renew with a lease for up to 30 years, providing consistent cash flow to you.
A Tripe-Net (NNN) is just one of many 1031 exchange options. In our last blog post, we filled you in on the specifics of a Delaware Statutory Trust (DST) exchange.
Smaller investors who don’t have the type of net worth or income required for a NNN lease may choose to participate in triple-net leasing by investing in real estate investment trusts (REITs) that focus on these types of properties in their portfolios. There are so many options!
When ready to learn more about all of your potential investment options, and which exchange option will work best for you and your situation, contact us here at Diversified Investment Strategies! Our comprehensive team is standing by and ready to help.
Bryan Hakola
Diversified Investment Strategies
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