Triple Net Investment Real Estate: When Is A Good Time To Sell?

Dec 10, 2013

In investment real estate circles, there is plenty of discussion about when to buy triple net real estate, and not as much conversation about when to sell it. For investors who are dedicated to reaching financial goals in a timely manner, knowing when to sell property is just as important as knowing when to buy it. While a property is often surrounded by unique conditions that make it good or bad to sell at a given point in time, in terms of selling a property quickly for a competitive price, there are also certain conditions that almost always favor a sale.


Assuming the lease rate is at least market value; the renewal of an extended lease (e.g., ten years or longer) makes a property highly attractive as real estate for investors. Investors know that money will be flowing in from the property for years to come, and thus feel comfortable acquiring the real estate for a competitive price. If you have recently secured a long lease for a property, now is a good time to list it and gauge the interest of prospective buyers.


When the industry of the tenant that occupies a property is booming, investors tend to perk up and show more interest in acquiring the property. While industry financial trends may be largely beyond the control of the tenant and its parent company, when the tenant’s industry is experiencing a boom period, it can create a perception of financial security that attracts investors. If your tenant’s industry is on the uptick, the investment real estate value of its property may be increasing as well.


A building that has maintenance problems is hard to sell for a competitive price. Prospective buyers know that, sooner or later, they will spend money on repairs, and potentially compromise the productivity of the tenant in the process. In many cases, the impact of unresolved maintenance issues creates more of a psychological barrier to the sale than a financial one. The money you spend on repairs is often more than offset by the price increase you can apply to the property.


To be truly investment worthy, real estate for investors typically needs close access to a traffic route that makes it easy for people to see the business and buy its products or services. In some cases, a triple net property gets a boost in traffic simply because a sidewalk is expanded or rerouted, or a new roadway is laid in close proximity to the business. If one of your properties experiences a permanent improvement in traffic conditions, you can likely sell the property for more than you paid for it.


The conditions above often increase the value of a triple net property; however, some of the conditions can also increase the tenant’s income and make it easier for the property owner to negotiate a higher lease rate when the lease is renewed. With this in mind, it is important to consider whether selling the property would be more beneficial than continuing to own it. The experienced brokers at Westwood Net Lease Advisors will help you make the right decision.


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