Often referred to as NNN properties, these are typically single-tenant retail properties leased to tenants with high credit ratings on “net, net, net” terms. This means that the tenant is responsible for real estate taxes, insurance, and all maintenance. At first consideration, these triple-net deals appear to be the perfect investment for a number of people. The reality is, however, that NNN investments are meant for a pretty specific kind of buyer. In fact, although triplet net property benefits can seem very appealing, you have to make sure that you are a customer that has all of the needed resources. From maintenance concerns like simple cleaning to more complicated concerns like plumbing problems, it is important that you are able to handle all of these situations.
Why Invest in NNN Properties?
Understanding the risks and benefits of any investment is always important, but if you are trying to understand why invest in NNN properties understanding these risks and investments is especially important. Overall, investment in U.S. commercial real estate surged 85% in the year 2015. And while many of these investments created large amounts of profits, others lost large amounts.
Consider some of these additional facts and figures about the real estate investment market and the impact that it has on the nation’s economy:
- $74.24 billion worth of commercial buildings were put in place in the U.S. in the year 2016.
- With a net worth of at least $1 million, excluding the value of their primary residence, or $200,000 of income, investors in triple net lease investment offerings must be fully accredited.
- 55% of millennials, the highest percentage of all demographics questioned, are interested in investing in real estate, according to the Real Estate Investing Report.
- During the five years leading up to 2017, demand for commercial real estate industry services has significantly increased. This increase was aided by the recovery of the overall economy. Between the years 2012 and 2017, in fact, the industry experienced an annual growth of 3.9%.
Real estate investments always come with a risk, but if you are thinking about triple net properties it is especially important to understand the challenges that you may face. A triple net lease is a lease agreement on a property where the lessee agrees to pay the “three nets”: real estate taxes, maintenance, and building insurance. And while it may seem like a great opportunity, it is a risk that not everyone is ready for.