Everything You Need to Know About Purchasing a Triple-Net Property
If you are thinking about purchasing a triple net property for sale, there are many questions you are probably asking and researching. Triple net properties provide an excellent opportunity for first-time investors to learn the commercial real estate market. At the same time, you should be ready to face certain requirements with regard to income level and net worth.
The Basics of Triple Net Properties
A triple net property, also termed “NNN property,” provides a low-risk, potentially high-return investment for first-time commercial property buyers. Furthermore, the investor has to put little to no effort into the upkeep of their NNN property because it is placed on the shoulders of the tenant.
It is common for the owner of a NNN property only to be responsible for the structural upkeep of their property. This means that they will take care of repairs and maintenance of the roof, electrical, foundation, and so forth. The mortgage and majority of maintenance requirements will be left to the tenant.
This commitment from the tenant makes having the right tenant a necessity. Frequently, when a triple net property is listed for sale, it means that the current tenant’s lease has run out.
Additionally, it could mean that the tenant has declined the opportunity to renew the lease. This is a common reason for investors to sell their commercial property. When a tenant moves out, the owner becomes responsible for locating another tenant and, in the meantime, is responsible for the mortgage.
Although you do have to have a certain income level in order to invest on your own, there are other opportunities for individuals to get involved. For instance, you can join a group of investors that have an equal share in the property. Meeting the requirements for income on your own can be difficult, so this is a great alternative.
Common Questions about Triple Net Properties:
One of the best reasons to invest in a triple net property is primarily a hands-off investment. The lease term for this type of commercial property typically locks a tenant in for ten to twenty years.
As a result, you have a greater chance of receiving a return on your investment. If this is your first time investing in a commercial property, consider hiring a triple net property advisor.
How Do I Purchase a NNN Property?
There are several steps to the process of purchasing a property. Saving money for a down payment is one of the first steps to ensuring you are approved. Most lenders will require their loan applicants to have a 30-40% down payment ready when applying for a loan. In addition, having an income that is not depleted by your down payment is something the lender will look at.
Hiring a financial advisor could be the right option for saving up a down payment. Part of the loan process is to run a credit score and evaluate bank statements, current debt, and other financial records. Having a financial advisor allows you to put your finances in order.
Before you apply for a loan, know what paperwork you are required to submit. This should include any documents that prove your prospective or current tenant is capable of providing mortgage payments. A lender will evaluate whether your tenant provides a stable source of income and has a clean history of paying bills on time.
Is Location Important?
Location is one of the most important factors you should consider when choosing a triple-net property. The property should be located in an easy-to-access place. The best locations are often in and around shopping malls.
A consistent flow of traffic to the property is a must if you want to ensure a steady return on your investment. If you are a first-time investor, try to avoid purchasing strip malls or buildings with more than one business. Simplify your investment by selecting only those buildings that have one tenant.
What Should I look for in a Tenant?
Triple-net properties often house drug stores, convenience stores, gas stations, and dollar stores. All of these chains provide a steady income. However, that is not the only concern you should think about when considering the importance of your tenant.
In fact, the tenant should have a clean financial record with a proven history of paying bills on time. Furthermore, it doesn’t hurt to ensure they are capable of committing to the maintenance needs of your building.
Are Triple Net Advisors Worth it?
If this is your first time purchasing a triple-net property, then hiring a triple-net advisor could be the difference between success and failure in your investment. An advisor can provide you with critical news on the market. Furthermore, they will offer priceless advice about the location, tenant choice, and loan process.
Choose Net Lease World to Locate a Triple Net Property for Sale!
Net Lease World is your go-to place for finding the most recent NNN property listing in your area. Each listing has a price, pictures, and other pertinent details to find the right property for you. Come check out our website for more NNN Properties for sale.
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