Frequent Asked Questions
Answers to Common NNN Lease Questions
When it comes to NNN lease investing, it’s important to understand the process and how NNN lease properties can be of most benefit to you and your financial goals. In this regard, we decided to publish the most common NNN investing FAQs here.
If you do not find the answer you’re searching for, please reach out to our Buyer Advisors. Our Westwood team is passionate about helping clients understand the process and enjoy fruitful NNN investments that offer time freedom and long-term, steady monthly income.
NNN Investing FAQs
Does it cost money to engage a Westwood Net Lease Buyer’s Advisor?
How much net worth do I need to invest?
The net-worth threshold to invest is usually $1 million, plus additional asset liquidity.
Do I need a down payment?
Yes, you need a down payment if you are financing the property, typically 30%–40%.
Can I pay all cash?
Yes. You can be an all-cash buyer.
Do interest rates affect the success of my NNN investment?
The potential benefits of securing a mortgage with a low interest rate can increase ROI, or Cash-on-Cash (CoC) return, financial leverage, and most importantly, increase basis that could be used for additional depreciation.
What is the average cap rate for most NNN properties?
They typically fall between 5.00%–7.50%.
What is the average internal rate of return (IRR) for NNN properties?
How long do I have to utilize the 1031 exchange after I sell another commercial property?
You have 45 days to identify, in writing, the new property you wish to buy, and must close on it within 180 days of selling your original property.
Can I exchange residential property in a 1031 exchange?
Yes, you can use the 1031 exchange if the residential property is not a primary residence.
How do I know which tax laws apply to me and when to use them?
This is different for everyone. Speak with your CPA for the best tax advantage opportunities.
How do I know when it’s time to sell or exchange my current investment property?
This is a personal choice based on comfort level, financial need, and lifestyle goals. However, we do not recommend selling your current NNN investment without buying a new NNN property within the required timeframe for the 1031 exchange tax benefit. If you sell and do not roll the capital gains into another property, your tax liability could be significant. Here are a few factors that indicate it may be time to sell:
- You own a NN lease property and want to totally remove yourself from any responsibility by buying an absolute NNN investment.
- Other businesses and the economics around your property have changed.
- At the end of the lease term, the building requires large capital expenditures that may not add value to the property or be recouped by the next tenant.
- If you want to continue to buy and sell and acquire better NNN lease investments with the 1031 exchange for major tax benefits.
Can I just buy land, without the building, in a NNN investment?
Yes. That would be done through a Ground Lease, in which the tenant rents the parcel of land and takes care of it in its entirety, for up to 25 years.
Is it beneficial to own more than one NNN investment property?
It can be greatly beneficial to diversify with different tenant types, asset classes, lease terms, and geographical locations. This lowers risk and adds stability.
Are triple-net properties 100% maintenance-free?
Absolute NNN properties are 100% maintenance-free.
At what point in the process should I contact a buyer’s advisor?
As soon as you begin contemplating NNN investing. It is never too soon to learn and take advantage of what the market is offering.
Want to Know More?
Contact Us for a No-Obligation Consultation
Whether you are a new or a seasoned investor, investing large sums of money in commercial real estate is a life-changing decision that requires planning. When you engage a Westwood Net Lease Advisor, we get to know you and your goals and help you learn everything you need to know – from the start of the process all the way through closing – so you can invest with confidence. If you would like to learn more, contact Westwood Net Lease Advisors today for your no-obligation consultation. 314-997-5227.
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