If you are thinking of purchasing a triple net property, there are several key points to consider before making the final buying decision. In here, we will present the most important ones.
What are the main features to look for investing in NNN properties?
- Priority one: location. It’s preferable to choose hard corners with high traffic counts.
- No median blocking is affecting the in and out car flow to the property for easy access.
- Try to receive the past two years sales performance of the tenant if you are able to obtain.
- The credit of the tenant and the guarantee behind the lease are two essential points.
- The type of business and the specialization of the building is important for future replacement in case the present tenant leaves.
- The length of the lease of the primary term should not be less than 10 years, preferably more.
- Increases in the rent per year should be minimum 1%.
- The structure of the lease should be true triple net, meaning no responsibility to the landlord including roof and structure.
- Check the competition in the area for the same products that are being sold by others.
- The rent per square foot the tenant is paying should not be excessively high for the area.
- The price per square foot for the building should not be extremely high for the area just based upon the name of the tenant and its lease.
- Always check the environmental condition of the building and the lot. Check survey, lease and title along with an attorney.
- Make sure there are no clauses in the lease that allows the tenant to void the lease before the primary term ends.
- Check with your lender to see how much equity or down payment is needed to purchase this type of property and terms of the potential loan.
These main key points will ease the entire process of investing in triple net lease properties. If you are not familiar with how to do any of these, get the services of a Buyer’s Agent.
