NNN beginner question

[Eli K.]

Hello I have about 650k of equity in a home and I'm thinking of getting out and buying a NNN like a Starbucks or another strong tenant with a long lease term, my first question is can I put it as a down payment on a 2m property like a 30% down payment? Another thing I read here is my net worth has to be over 1m to qualify for the loan and my net worth isn't, do I have a chance? Can you get a pre approval for commercial like you do before you buy a house ? Thank you guys

[Brian Kloft]

Most commercial loans don't really care much about you and your credit. There are not any commercial pre approvals as it is based on the property and not you. They want to make sure that the property itself will pay for the loan. Typically they are going to look at what the property generates in net income and then want it to cover the loan plus something like 20% more. There might be some differences if you are looking at single tenant buildings. Keep in mind that sometimes even strong tenants go out of business or bankrupt. When you have a single tenant building if they go under and you no longer have rent coming in that you are going to have to cover the loan with your own income until a new tenant is found. Often finding a new tenant on those buildings will take a while and then they are going to want you to pay a significant amount of money to make the place the way they want it. (either in cash or in free rent) Single tenant NNN properties can be great as long as you have a tenant. There are lots of people that love them because typically the tenant takes care of everything and all you do is have your own insurance.