Do you dream of investing in commercial real estate with the hopes of becoming a real estate mogul? Are you close to retirement and want to diversify your investment portfolio? Maybe you want to leave sustainable revenue to your children or grandchildren?
Whatever the reason, if a reliable, low-risk, growth-based guaranteed monthly income with little to no property responsibility sounds favorable, then NNN investing may be for you.
But how do you qualify?
How Much Money do I Need?
The general rule of thumb is that you should have a net worth of about $1 million (not including the value of your primary residence) and/or make $200,000 per year.
If you plan to pay all cash for a NNN property, an annual income is generally not a requirement.
If you plan to obtain a commercial mortgage and don’t have a million-dollar net worth, in general, you need to make $200,000 or more annually and have liquidity in your asset portfolio aside from your primary residence.
You will also need a 30–40% down payment while maintaining liquidity in your portfolio.
Does My Credit Score Determine NNN Financing?
Your credit score has relatively little effect on NNN financing.
Since most NNNs are leased to major brands that guarantee the lease and pay rent, taxes, insurance, and common area maintenance, the tenant’s credit is the main determinant for financing.
Other factors that come into play include the length of the lease, rent increases over the lease term, and the quality of the real estate or location.
How Much Do NNNs Cost?
In most cases, NNN investment properties start at around $1,000,000. The following NNN lease properties are examples of those with a lower barrier to entry:
- Dollar stores – $1-2 million
- Fast-food restaurants (also called Quick Service Restaurants or QSRs) – $1.5-2.5 million
- Healthcare/medical – $1.5-2 million
- Some convenience store/gas station combos start in the region of $2 million
How do you know if NNN investing is the right choice for you?
Before you start looking at properties, start with a risk tolerance evaluation and look at your financial situation, then define your lifestyle and wealth objectives.
Be realistic when you do this, and really decide if you have enough capital to embark on NNN investing and what you hope to get and what you need from the investment.
For a complete rundown on how to perform a risk tolerance assessment and decide if NNN investing is for you, read our blog How to Know Which Property is Right for You or simply reach out to our team. We’ll help you complete your risk tolerance and financial questions and navigate the entire process with ease.
