In this video, Joel, Principal Broker of NNN Invest, discusses the risks involved with owning a single tenant net property. The risks involved with owning this type of property vary depending on what is written in the lease. Joel explains why NNN Invest advocates for certain property locations and why location is crucial with this type of property.
Are there any risks involved with this type of investment?
Yes! Risks involved with owning a single net lease property vary depending on what’s included in the lease.
What are some things that an investor can be responsible for within a lease?
For example, in a double net lease, the investor can be required to resurface the parking lot, fix utility lines, responsible for air conditioning units being fixed, roofing, and can be responsible for the structure of the entire building. These are examples of things that can be written into the lease and are things that the owner will be responsible for if the property is not an absolute triple net lease.
Are there risks in a ground lease?
Within a ground lease, if you don’t own the building, there is usually not a tax depreciation associated with the property.
What if the tenant decides to leave?
If the tenant decides to vacate, depending on the size and shape of the parcel of land and the building, it can be a challenge finding a new tenant to occupy the property. Facing this challenge may mean that the property is empty for a few months or longer. In order to try to avoid this challenge, at NNN Invest, we advocate for strong suburban to urban core locations that usually have a waiting list of tenants that are wanting to go into these property locations.
What are the suggested location areas for these types of properties?
At NNN Invest, we advocate for strong suburban to urban core locations that usually have a waiting list of tenants that are wanting to go into these property locations. Conversely, if you have a property located in a weak suburban to a rural location and the tenant vacates, the tenants that are interested in occupying the property are typically mom-and-pop and local business owners that may not be willing or able to pay the cost of rent that an investment grade tenant would pay.