What do all of these have in common:
- 1031 Property Exchanges,
- NNN properties,
- Depreciation tax advantages,
- Trading Investment Properties,
- Commercial Income Properties
These terms solidify a great commercial real estate investment STRATEGY and help to preserve your equity, grow your net cash flow and shelter your taxable gains when selling.
A 1031 property exchange delays your capital gains tax when selling investment property while NNN properties makes it easy to replace your sale with an income producing property that has no expense or headache of the tenant with the new purchase. Trading investment properties through a 1031 exchange or starker exchange allows the profit to roll through to another income property asset that may have less aggravation with tenants and more secure income.
Commercial income properties, such as triple nets or NNN properties, like Walgreens or McDonalds, transfer the expenses to the tenant and the cash flow to you, the investor. The tenant has all responsibilities for repairs and expenses of the structure.
When owning these investment properties, the investor gains depreciation benefits that will offset some of the net income thus reducing the tax per year to the IRS on cash flow derived from the tenant. If a loan is involved interest is also deducted from the cash flow.
Commercial income properties is one of the leading strategies to gain possible future appreciation, taking depreciation, doing 1031exchanges to prevent tax on possible capital gains while at the same time having little to no responsibility for anything with quality NNN properties as the ideal purchase.
When purchasing NNN properties, not only look for quality locations with creditable tenants, but increase in the rent to keep up with any inflation we may have in the future. Trying to get a non- recourse loan from a lender helps but can only be done with a very large down payment or a highly credit worthy tenant with Triple B rated status in most cases.