Off-market NNN or Single tenant triple net property has become a very recognizable term in recent years. Off-market triple net or NNN, net net net properties are some of the favorite investment strategies for wealthy investors.
Strong credit tenant, no responsibility to the landlord for taxes, insurance, repairs or common area maintenance, great location, well-known tenant, usually a free-standing building on a corner or high profile high traffic street in a nice city.
What Off-Market Means?
Off-market simply means that the owner wants to sell the investment property but not promote it on public websites or mass emailing for they want privacy without a lot of annoyance to themselves or their tenants from buyers just browsing and not being able to act or brokers promoting their own agenda.
They know the real estate brokers, like Westwood Net Lease Advisors, already have the top buyers usually in 1031 trades at their fingertips, so why mass publicize when they can accomplish the same sale privately through an experienced broker like Westwood with less stress and the best sale price results.
Triple net properties offer better security for collecting rent without the countless hours of concern with property and tenants. If a wealthy investor already has diversified investments and simply wants to add one or two safe, conservative real estate income properties to their portfolio, triple net properties are their answer.
Of course, these properties have lower cap rates, meaning return on investment may be five or six percent instead of seven or eight percent because of their high quality and less risk. In addition, lenders are more likely to make lower interest-rate loans and longer-term loans on these triple net, net net net properties. A true cash flow will be determined whether you’re paying all cash or how much equity you’re putting in the deal to see how much your loan will cost per month. Usually, the greater down payment, the lower interest rate, and a non-recourse loan can be obtained from most lenders.
What Determines The Cap Rate?
There are differences in triple net, net net net properties and the buyer needs to know the reasons some of the same tenants are higher or lower in cap rate values. The city, the state, the growth possibilities, the age and the location and length of the primary term left on the lease along with sales will determine the cap rate when purchasing these valuable assets.
So if you have the same tenant, like Walgreen’s, one in a fast-growing state and city with a longer-term lease 10 years or more versus a shorter term lease Walgreen’s in a less desirable city and state that is not growing, the cap rate is significantly different for the two properties.
Successful Single Tenant Properties
Other single tenant properties that are not necessarily retail but warehouse or office or medical, are optional choices for your diversified portfolio. These particular buildings do not have to be located on major streets or to be highly visible in order to be successful. They do need to be located near highways, sometimes rail if warehouses and have a population demographic that can support the office use or the medical needs of a community.
When deciding to purchase income or investment property, it pays to understand that diversification is essential to balance your portfolio. If you already are gambling in the stock market, bonds and commodities it may pay to purchase single tenant triple net properties as a balance and safety valve against stock market crashes and an economic crisis that can quickly wipe out an investor’s returns overnight.