Do you dream of investing in commercial real estate with the hopes of becoming a real estate mogul? Are you close to retirement and want to diversify your investment portfolio? Maybe you want to create an estate plan to leave sustainable revenue to your children or grandchildren.
Whatever the case may be, if a reliable, growth-based, guaranteed monthly income with little to no property responsibility and very low risk sounds favorable – investing in triple net leases may be for you.
Financial Requirements for NNN Investors
When discussing who should invest in triple nets, the first consideration is financials.
- The general rule of thumb is that a NNN investor should have a net worth of $1 million (not including the value of your primary residence) and/or make $200,000 per year.
- If you plan to pay all cash for a NNN property, an annual income is generally not a requirement.
- If you want to obtain a commercial mortgage and don’t have a million-dollar net worth, you need to make $200,000 or more annually and have liquidity in your asset portfolio.
- You will also need a 30–40% down payment.
Some NNN investment properties start around $500,000 and go as high as $25–50 million for big-box retailers, such as Walmart and Home Depot; portfolios of multiple properties, and some industrial properties.
As a guideline, here are what a few of the more popular NNNs sell in the region of:
- Dollar stores: $1–2 million
- Fast-food restaurants: $1.5–2.5 million
- Gas stations/convenience stores: $1–2 million
If you choose to buy a Dollar General for $1 million, you would need a $300,000 to $400,000 down payment, in addition to the other requirements. Please see our properties pages for actual sale prices of a wide range of triple net investments.
What are Your Reasons for Triple Net Lease Investing?
What are your reasons or goals for owning a triple net? Knowing this will help you decide where to start your property search and if triple nets are right for you.
- Do you want a stable, recession-proof, pandemic-proof retailer that holds its value?
- Do you simply want to collect rent, travel, and enjoy life without actively managing commercial properties or worrying if the tenant will pay the rent, or do you prefer a more hands-on investment?
- Do you want to use a tax benefit, like the 1031 exchange or cost segregation depreciation?
Financial Benefits of NNN Lease Investing
Aside from the lifestyle freedom, there are many financial benefits of NNN lease investing, as well as the peace of mind knowing your asset is being cared for and your income is sound for the next decade or more.
- Passive, guaranteed income from anywhere in the country.
- A reliable, low-risk investment, typically with a comparable 7 to 10% IRR.
- Annual tax opportunities.
- Depending on how you purchase, the cap rate spread can lead to a higher cash-on-cash return, potentially creating positive leverage.
- Wealth building, preservation of wealth, and stable investment diversification.
- Permanent, tangible asset with value that will not fluctuate day-to-day.
Investing in one or more triple-net lease properties that fit your financial and lifestyle goals is the key to a successful and sustainable long-term NNN investment strategy that builds wealth.
To Wrap it Up – Who Should Invest in Triple Nets & Why?
Triple net lease investments are a great fit if you are a high-net-worth investor who wants a responsibility-free, low-risk investment that offers stability, reliable monthly income, tax opportunities, and more. NNN properties are also an excellent way to build wealth early in your career and create a conservative yet growth-based commercial real estate empire.
How to Get Started
If you’re ready to start looking at triple net lease properties, the best way to secure the right investment for your goals is to use a reputable buyer’s advisor who gets to know you, knows the market, and is well-known in the marketplace. Westwood Net Lease Advisors’ highly experienced, reputable advisors work hard to help you navigate the often-complex buying process with ease, from before the property search through closing and beyond, while offering objective advice, education, knowledge, and advocacy – all at no charge to you. Contact us today for a no-obligation conversation. 314-997-5227