If you are looking to invest in the commercial real estate domain, a triple net lease makes a great prospect. Single-tenant NNN properties are a relatively low-risk option that offers the most reliable income stream for the long haul.
The best part is that you need not worry a lot about recurring financial expenses such as annual property taxes, maintenance costs, and insurance. These properties are great for building equity and adding diversity to your investment portfolio.
But everything boils down to choosing the right property. If you aren’t sure about picking one for investment, here are some guidelines to help.
Look for the right location
When it comes to the NNN property value, you cannot overlook the importance of the right location. You need to consider both physical and geographical locations when looking for investment options. An area that has good traffic and accessibility is ideal from a physical perspective.
Since it is a commercial investment, prioritizing corner locations is a good idea. Also, consider the other businesses in close proximity to the building. The geographical location decides the growth rate of investment.
Choosing an area or city with a steady population increase, good employment rate, and a healthy economy makes a wise decision for an investor. Tenant demand is another factor to consider if you are looking for a viable option.
Pick the best potential business type
Since triple net investment involves commercial properties, you need to consider the potential business types that can run there. It is best to look for ones that can support profitable business types regardless of the state of the economy.
Look for nnn properties for sale which are suited for recession-proof businesses that are not affected by economic downturns or slow times. Grocery stores, convenience stores, medical clinics, drug stores, and discount stores are some examples of businesses that run seamlessly, irrespective of the economic landscape.
Pay attention to tenant potential
Another factor you cannot miss out on while looking for an ideal NNN investment is the tenant potential of the place. Many properties will come with a long-term tenant lease, which often ranges between 10 to 25 years. If you plan to pick such an option, reviewing the history of the tenant’s business is a good idea. A viable rental history is favorable.
Also, check whether they have been regular with the tax and insurance payments. It makes sense to ensure that they have the longevity to continue tenancy even after you take over ownership. Good tenant potential gets you the assurance of security of your investment. If you can find a property with a high-yield brand or chain as a tenant, you can expect worthy benefits.
Triple net investments set you up for a secure and lucrative investment. But you can expect the best only with the right choice of the property. Extensive market research goes a long way in picking the right option. You can go the extra mile by seeking the advice of an expert who can help you decide more confidently.