Guidance on NNN investment

[Heena Meena]

I've been a reader since year or so on these boards. I recently learned about NNN single tenant investment and it seems like right kind of a passive income for me. The returns seems good and zero ongoing management. I'm hoping experts on this boards can share pros and cons of NNN investment and their experiences if you own NNN properties. Also, do you recommend any experienced NNN real estate agent who can help and guide us.

Thank you for your time and help.

Thanks,

Heena

[Joel Owens]

Hi Heena,

You said you have been on this board for about a year. Have you read my posts? I have about 14,000 posts over about a decade of time and many cover NNN properties in depth.

If you look at someone's profile there is a history section of archives of what they have posted over time. There is a magnifying glass top right on the website for a keyword search as well.

I review about 1,000 properties a week for NNN. I am a principal broker and investor that helps clients nationally purchase and evaluate properties. Often people come on these boards looking for information which is understandable. Owning NNN can be more passive but there is a lot to evaluate when purchasing a property.

Biggest thing with NNN is what kind of down payment do you have? There are urban core, strong suburban, weak suburban, and rural markets. The better quality properties tend to be in the higher price points. Every investors situation is unique. If you are looking to invest possibly millions into buying NNN you need an expert. Sometimes people post about NNN and frankly have very limited knowledge of it and specialize in another asset class. The experts however tend to have the deep knowledge on a specific subject.

Most potential clients I get on a call with as lots to discuss with NNN.

With NNN I look at location (value of the dirt), tenant (mom and pop, regional, national, credit rating), ( investment grade public rated, public rated non-investment grade, private rated, no rating), lease structure ( any early termination clauses, any required business financial reporting, operator liquidity and net worth statements,personal or corporate guarantees, number of units backing the lease, is financial reporting location only or also whole company, percentage of rental increases, whether current rent is at above or below market, frequency of rental increase annually or ever 5 years, remaining primary term left on the lease, option periods, Tenant Improvements owed, leasing broker commissions owed, exclusive use clauses, co-tenant clauses for bigger back anchors, verifying if lease is truly absolute triple net versus NN, etc.) , road traffic counts, starting cap rate on purchase with blended cap rate over time, 1,3,5 mile population levels in a ring radius, median income households levels, income and population level growth trend's, crime stats, is property on going to work side or going home side of road, when was property last re-imaged inside and out with the building, sightlines to property ( is it visually down in a hole or up on a hill which deters customers to patronize the business ) or is it nice and level and easily visible from the main road, parking ratio spaces for the parking lot is it ample or not enough for the tenants business model, any future road widening that would impact the parcel size of the property, access with how hard is it to get into the property such as a U-turn, does it have large back anchors for cross feeder daily traffic to the site, etc.

All these things and more come into evaluating NNN properties.

Hope it helps some.