If you are shopping for triple net real estate in Florida, you should consider how the region’s weather might affect the property you buy. Since 2000, 63 tropical storms have ripped through Florida, leaving over $64 billion in damage in their wake.
Many owners of triple net income properties that were condemned in the wake of these storms lost a significant amount of income because the leases didn’t obligate tenants to pay rent for buildings they could no longer inhabit.
Executing a bondable lease, which requires the tenant to continue making rent payments after a building is condemned, is one way to prevent this situation. If you plan to buy U.S. investment property in an area that is prone to natural disasters such as tropical storms, protecting your investment with a bondable lease could save you thousands of dollars in rental income. It could also put you in the position of owning a highly attractive piece of investment property.
ADDITIONAL BENEFITS OF BONDABLE LEASES
The primary benefit of a bondable lease is that it is completely net. The tenant even pays to repair the building after paying for building insurance. However, because only the most financially secure tenants can afford to enter the lease, not only does a bondable lease protect the owner from losing income; it also increases the likelihood that the tenant will have an excellent financial standing, which in turn increases the attractiveness of the property to other investors.
Bondable leases aren’t as common as standard triple net leases, but they are not unusual in an area where weather related building damage is a serious concern. The state of Florida, which has experienced 63 tropical storms since 2000, is such an area. If you are shopping for commercial income properties in Florida, speak with Westwood Net Lease Advisors about targeting properties with bondable leases. It may be a strategy that helps protect your finances.
