Owning commercial real estate may seem overwhelming and, perhaps, a class of real estate investing that should be left to more prominent investors. However, with a bit of knowledge, the right professional team in your corner, and an understanding of NNN leasing, you can confidently buy and own commercial real estate.
Most investors get into real estate in a hunt for the every-elusive passive income stream. Unfortunately, owning rental property — single-family, multi-family, short-term, or commercial — is not what most people consider passive. Managing tenants' needs, property upkeep, and vacancies is a lot of work. Therefore, investors need to be constantly vigilant to protect their investments.
That said, NNN commercial real estate for sale is the exception due to the nature of a NNN lease. A standard lease agreement requires the tenant to pay rent and some utilities. A NNN lease, or a 'triple net' lease, on the other hand, is one where the commercial tenant not only agrees to pay rent but also the property taxes, maintenance, and utilities. Except for cashing a check each month, this arrangement results in a truly passive experience for the investor.
Again, due to the way a NNN lease works, the income is very predictable each month. The tenant in a NNN commercial property pays all costs associated with occupying and using the property. The investor has a stable, predictable income for the lease length without worrying about how an increase in insurance rates, utility costs, or maintenance fees will affect that revenue stream.
Better loan terms
Unlike single-family rentals, where tenants move out each year, NNN leases are typically for multiple years, creating a guaranteed cash flow for all those years. Lenders like to see that reliability and often reward investors with favorable loan terms like lower interest rates or longer loan terms.
Investment gurus always preach diversifying your portfolio. In the stock market, this could mean investing in larger, blue chip companies and smaller start-ups or spreading your investments out between several industries, like tech, healthcare, and retail.
The same can be said for real estate investing. By including NNN commercial real estate in your portfolio, you're diversifying the types of properties you own and the types of tenants. Therefore, this strategy can help buffer you from potential hardships in any particular sector.
Buying NNN commercial real estate for sale is a great way to add stability and predictability to your portfolio. In addition, the passive income and favorable loan terms make it a smart investment for any investor.Share