NNN Absentee/out of state investing

[Daniel Chang]

Hoping @Joel Owens or someone more experienced in Triple nets can answer.

If looking to invest in an out of state, NNN single corporate lease 10+ years (ie Family Dollar, Starbucks, etc.), how important is it to do actual physical due diligence? I'm not talking about market conditions, financials, comps, etc. I'm talking about having contractors inspect the roof, HVAC, foundation, etc.

I know the best answer is to always do this in case the tenant goes dark.  I'm not looking for the best answer.  I'm looking for the practical, general investor experience answer.  

[Joel Owens]

I have an engineer that does phase one, site inspection, and cost reserve stable for one price.

Cost for everything above is in the thousands on average.

Even if NNN with no landlord responsibility we still get the inspection as part of DD process.

If the tenant doesn't renew it is important to know right before the option period kicks in how much life is left on roof, mechanicals etc. as in addition to the TI costs to re-tenant you can get hit with a lot of other capital costs.

Lender is going to order a PCR site inspection report whether the buyer wants to or not. Insurance will also do an ISO inspection on the property separately.

If you are paying all cash then it's up to you what your risk tolerance is versus saving a couple of bucks.