Now’s a Great Time to Buy a NNN Investment

Mar 17, 2020

Business Continues & NNN Opportunities Abound

During this historically uncertain and challenging time, Westwood Net Lease Advisors would like to reassure our family of clients that we are here for you and conducting business without interruption. In fact, there has never been a more opportune time to invest in triple-net (NNN) lease properties for many reasons, most notably the reliable income and long-term stability.

In the following article, we explain why this is a great time to buy a NNN investment property, and:

  • Why NNN properties are safer than the stock market and how they build wealth.
  • How you receive stable, guaranteed monthly income for 10-20 years.
  • Why use the 1031 exchange now to relinquish unpredictable multi-tenant properties.
  • How historically low interest rates may be helpful when obtaining debt to purchase.

Businessman drawing an exponential curve of a progress in business performance, return on investment - ROI, on a virtual screen presentation.

Why NNN Investments are Safer Than the Stock Market

The stock market is fluctuating wildly, non-essential businesses are being forced to shutter, and financial institutions are lending at historically low interest rates – all reasons why NNN investments are a safer investment choice, providing peace of mind and the stability that is needed in times like this.

Whether you are a new or a seasoned investor, now may seem like a good time to invest in the stock market as shares are available at historically low rates. However, the stock market is meant for the long game, with no guarantee of monthly income or a return on investment. You can lose as much as you gain within minutes and have zero control over the outcome. With stocks and bonds, your wealth is tied up for decades and at the mercy of the market, rather than in your control.

Conversely, if you buy a single-tenant NNN lease property, your money is not subject to the wild swings and uncertainty of the economy or stock market. As a NNN property owner, you are guaranteed a monthly income with few or no responsibilities or expenses for 10-20 years. Income that does not decline. In fact, there are typically rent increases built into the lease every three to five years, regardless of the economy. You simply collect monthly rent while the tenant takes care of the property.

“When you own stocks or bonds the value of the investment lies within a piece of paper promising repayment or income. When you own a NNN property, there are multiple guarantees bolstering the asset – a lease with a strong tenant promising to pay a guaranteed rental income and the tangible underlying real estate value adding another layer of security to the investment.” – Jason Simon, Vice President, Westwood Net Lease Advisors

Business Make Money Concept

How NNN Property Owners Receive Guaranteed Income

A triple-net property is typically leased to a needs-based, investment-grade tenant with a legally-binding, corporate-guaranteed lease for 10-20 years, meaning, the tenant pays the rent no matter what. These types of tenants, such as Dollar General, DaVita/Fresenius/healthcare clinics, Walgreens, 7-Eleven/convenience stores, and fast-food/QSR restaurants, are most often recession-proof because they sell must-have products and services that people need, especially in tough financial times and during a health crisis.

These corporations rely on their partnerships with real estate investors to continue to grow and serve their customers. They also tend to evolve with customers’ needs and have strong overall financials that can carry them through economic challenges. Rest assured, your multibillion-dollar tenant will be a reliable occupant who guarantees consistent monthly income for 10-20 years while you build your portfolio and reap the annual tax benefits.

Triple-nets offer asset and rent growth, strong current yields (ROI), long-term predictability for up to 20 years, legally binding leases from creditworthy tenants, and guaranteed, monthly rental income. Additionally, diversifying with nationwide properties, different tenant types and asset classes, lease durations, and different industries offers even more stability.

Why Use the 1031 Exchange at This Time?

If you currently own high-maintenance or multi-tenant properties, this is an ideal time to utilize a 1031 exchange to trade-up to one or more stable NNN properties. This tax code allows you to relinquish the unpredictability and potentially high turnover that can occur in tough economic times by selling your less reliable investment property and investing the capital gains, tax-deferred, into one or more stable NNN properties. This preserves capital, offers time and expense-freedom, and the security of hassle-free monthly rental income.

low interest

Do Interest Rates Matter & Are They Really 0%?

If you take on debt for a NNN lease investment, low interest rates can increase positive leverage and provide a higher cash-on-cash return.

Are interest rates really “0%?” Most likely, not to investors. The zero percent rate you’re reading about is the interest rate the federal reserve is charging financial institutions who loan money to those seeking financing. Will banks offer zero percent to their borrowers? While it is unlikely banks would ever offer zero percent to borrowers, interest rates are still at historic lows, making it a great time to take advantage and capitalize on the positive spreads between interest rates and cap rates.

If you’re thinking of NNN investing, it is best to move forward with your decision to buy a property and lock in a low rate while you can. Prime NNN properties sell fast, and with the uncertainty of the stock market combined with all-time low interest rates, demand is likely to increase in the coming months. Many great opportunities still exist for buyers who take quick action and utilize the current environment available to them.

sometimes paying cash for your next real estate income property is a better solution

To Wrap it Up – Use This Opportunity to NNN Invest

The worldwide crisis in which we find ourselves has caused a lot of stock market and economic instability, which can be paralyzing and instill fear in even the savviest of investors. However, this is a prime opportunity to invest in the right NNN property for security of income and wealth-building not often found in other types of investments.

With prime NNN properties being sold off-market and at record pace, we recommend partnering with a Westwood buyer’s advisor to find the right property for your goals. Our expert team will ensure you are properly represented and walk you through the process, from the property search through closing, all at no cost to you. We wish you and yours safekeeping and want you to know we are here if you need us. Please don’t hesitate to contact us today with any questions or concerns … our consultations are free, 314-997-5227.

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