Company: NNN Invest (Passive Partner)

[Matthew Nesbit]

I noticed on this company's website that they offer Passive Partnering for those who are accredited, but do not have enough funds to completely own a NNN property.

The company site explained that it will act as the General Partner (handling the deals and property) and the Limited Partners (me and some people) would just collect the checks every month. Was wondering if there are any hidden fees I should be aware of. Looking into investing with this company. Any info would be appreciated!

[Greg Scott]

I'm just curious what entices you to invest in NNN as a limited partner?

The main benefit of a NNN is that it is not as management intensive, because the tenant-business takes care of basically everything. But, if you are limited partner in NNN deal, a mobile home park, an industrial park, an office building, or an apartment complex, your job is the same: read the occasional report from the GP, cash checks, maybe attend an annual meeting and vote on the occasional proposal. So why NNN?

In any event, and regardless of whether this is an NNN or other type of property, the devil is in the details and usually the same sort of details. Here are my recommendations:

• Read the Operating Agreement.  Understand what is in it.   Don't believe anything that isn't written in the Operating Agreement.  Any GP that says "we intend to publish financials quarterly" should have no problem putting that wording in the Operating Agreement.  I have had friends where the GP goes dark and they don't know what is going on.
• Understand the deal and its numbers. I've seen smoking hot deals and total dogs that both have beautiful business plans. The beauty of NNN is its simplicity, but they also have unique risks. The major risk is your tenant goes out of business and the building is uniquely suited to their business, such as a Taco Bell, which would make that building difficult to rent to another tenant. You may need to do due diligence on the tenant to adequately assess risks.
• Vet the GP.  Do they have a track record?  Have they gotten in legal trouble before?   A great GP can turn around a difficult deal.  A bad GP can destroy a great deal.