Triple Net (NNN) lease – Pros and cons, and how to find NNN properties for sale

Triple Net (NNN) lease – Pros and cons, and how to find NNN properties for sale

Those who work in commercial real estate know that the triple net lease or, commonly called, NNN lease is only becoming popular by the day. Despite the popularity, the NNN lease is still frequently misunderstood by many commercial real estate professionals, and of course, the general public. So, let’s better understand the triple net lease, its pros and cons, and look at how to find NNN properties for sales.

What is a triple net lease?

A triple net lease or an NNN lease is a type of lease agreement in which the tenant agrees to pay for all operating expenses associated with a property and the rent cost. Each “N,” or “net” in triple net designates one operating expense category that the tenant is responsible for. The operating expenses of commercial properties include real estate taxes, building insurance, and maintenance.

To understand more clearly, in a single net lease agreement, the tenant agrees to pay for one of the above expenses. Likewise, in a double net lease agreement, the tenant agrees to pay for two of these expenses. So, a triple net lease agreement means that the tenant is responsible for all three property expenses.

NNN lease pros and cons

Pros

A triple net lease can be beneficial for both owners and tenants. As you imagine from the owner’s perspective, the NNN lease looks quite lucrative. The owners are free from incurring any unexpected or inconsistent costs over time. This ensures that their income from the property remains steady.

When you look at the triple net lease from the tenant’s standpoint, the key benefit is that you get the total control of a property without even owning it. This is helpful when you’re buying a franchise of a fast-food brand, as you might want to give the property a complete makeover and make a few other adjustments before you’re ready for business. Also, since the tenants are taking on most of the cost, these properties are available at lower rent rates.

Cons

The tenants mostly bear the downsides associated with triple net lease agreements. Firstly, they take on more expenses, more management, and other responsibilities that come with the NNN lease. Even when the business of the tenants takes a hit, they are still required to pay the same rent cost to the owners. Apart from this, they are also required to pay for weather damage and other repairs.

How to find NNN properties for sale

Finding NNN properties for sale can sometimes be tricky. Many listing platforms do not provide filters that can help you exclusively look for NNN properties and other associated aspects. That said, there exist a few that lets you search for specific properties with NNN leases.

You can explore these below-mentioned platforms to find NNN properties for sale. Some of these will allow you to search properties by asset class, tenant type, and tenant names to help you find a triple net proprietary ideal for you.

  • Reonomy
  • LoopNet
  • CREXi
  • Ten-X
  • Marcus & Millichap
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Pros and cons of automated investing

Automated investing services, or Robo advisors, have become ubiquitous in the present times. Many financial service companies now have their own automated investing services. There’s no doubt that the introduction of Robo advisors has made investing an accessible financial option to many. However, automated investing has some disadvantages as well. So, before you decide to opt for the best automated investing service, have a look at its pros and cons.Pros of using Robo advisorsLow feeLow management fees are one of the biggest advantages of opting for a Robo advisor. Big names in the finance industry such as Charles Schwab Corp.'s Intelligent Portfolios offer Robo advisors for free, while some financial institutes such as Betterment and Wealthfront charge a low 0.25% as a management fee. High-quality investment portfoliosAlgorithms used in some of the best automated investing services such as the ones provided by Betterment are backed by Nobel prize-winning investment models. These models are created to offer the greatest return on investment for the smallest risks. Access to a financial advisorMany traditional financial services companies now use Robo advisors to select assets for their client’s investment portfolios. This allows them to offer their clients financial advisers that can help them with taxes, loans, and any kind of financing or investment.Easy to useRobo advisors make the entire investing process extremely quick and easy. With Robo advisors, all you need to do is answer some questions about your financial goal, risk tolerance, and capital, and the algorithm will come up with an investment portfolio that is suitable for your needs. Low minimum balanceEven individuals with low net worth can enjoy the services of professional advisory via Robo advisors. Several investment companies such as Betterment and Ellevest offer access to the best automated investing services even with zero balance. Cons of using Robo advisorsThey're not financial plannersIndeed, in terms of purely creating profit-racking portfolios, the best automated investing systems can be better than human financial planners. However, a Robo advisor cannot understand your short- and long-term goals and financial concerns as a human financial advisor. A good financial planner understands your financial aims and helps you create a portfolio that helps you meet your future retirement goals. Financial planners are especially helpful at times when the market is not performing well. They can be limitingRobo advisors can’t go beyond their pre-programmed questions when creating an investment portfolio. They can also be limiting if you’re looking for more complex investment strategies, and can’t engage in trading on your terms. Many sophisticated investors demand a larger investment portfolio with different asset classes, which may not be possible even with the best automated investing systems.

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Understanding common types of loans

Buying a new house or vehicle or starting a new business is a big investment for most people. Even if you have the cash to pull off such an investment, financial experts advise opting for a loan for expensive purchases to maintain liquidity. Moreover, affordable interest rates and manageable payment schedules make it easier to deal with fixed financial obligations. Here are the common types of loans that can help you fund an expensive purchase: Personal loans Personal loans are commonly used to tide over some emergency or pay off outstanding debts. You can also use them to pay for expensive products or services. Depending on the amount, you can get the funds in less than 24 hours. Banks charge a fixed interest rate on the principal, and the loan is repaid in equated installments over a fixed tenure. The lumpsum cash can be used to pay off anything. Personal loans carry a lower interest rate, don’t require collateral, and are quickly disbursed by most banks and financial institutions. You can use it to pay for education, an expensive vacation or a wedding, a new vehicle, or for home relocation and remodeling. Business loans Banks and credit financial institutions also provide exclusive funding for small and mid-size businesses that require capital for initial setup and operations. But business loans are not easy to get approved for because banks need to verify the creditworthiness and financial background of applicants. You need to have an established base for conducting business and show tax returns, sales receipts, and yearly income to be eligible for extra funding. Once approved, a business loan can be used to expand current operations, upgrade or replace old equipment, stock up on inventory for production or manufacturing, and even hire fresh staff to manage the expansion. Auto loans Today, vehicle financing has made it possible for everyone to own and drive a car. Borrowers can get access to these funds within a short period and can get them at favorable interest rates if their credit rating is high. Dealer financing, banks or credit union loans, and even online private lender loans are common modes of vehicle financing. With the first option, you can directly avail loan from the vehicle dealership. Alternatively, banks may offer more competitive rates of interest and repayment options. Auto loans are available for most types of personal use and commercial vehicles. Home loans Real estate is one of the most expensive purchases. For this purpose, banks and credit unions offer home loans at a fixed interest rate and repayment tenure. Multiple factors make this loan expensive, including application fees, processing fees, credit rating, underwriting commission, federal taxes, and insurance costs. In addition, closing costs have to be paid after the loan is approved and disbursed. To buy a new house or property, you can opt for conventional mortgage loans, Federal Housing Administration Loans, U.S. Department of Agriculture Loans, or even Veteran Affairs Home Loans.

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