Top 5 Benefits of Buying a NNN Property

Top 5 Benefits of Buying a NNN Triple Net Property

Buying a Triple Net property comes with singular benefits to investors that other investment properties don’t offer. Nowadays there are many investors transitioning from the traditional investment property that requires the investor’s heavily involvement in managing the property, into triple net properties looking for a truly passive income investment. Although buying a triple net property have many benefits, we are going to focus on the Top 5 Benefits of Buying a NNN property.

1. Your Rental Income is Net of Property Taxes, Insurance and Maintenance Costs

When you buy a triple net property the tenant is responsible for paying the property taxes, property and liability insurance, and maintenance costs. In an Absolute NNN Lease, the tenant is also responsible for the capital improvements, such as roof, structure, parking lot, air conditioning system, among others. A triple net property is a truly passive income investment, in which the rent is completely net.

2. No Landlord Management Responsibilities

One singular and unique benefit of buying a single tenant triple net property is that there are no landlord’s management responsibilities. The tenant takes care of everything on a daily basis, and you will never receive a phone call from the tenant saying that the air conditioning unit is not working or the roof is leaking, the Tenant is responsible to take care of that. I have personally seen many multi family investors selling their properties to transition into a single tenant triple net property to avoid the daily hassles of managing a residential property. Moreover, if you buy a single tenant triple net property, the fact that you only have to deal with one tenant certainly reduces the hassles of having to deal with multiple tenants.

3. Long Term Leases with Rent Increases and Renewal Options

In a triple not property leases are usually 10, 15 and 20 years long, given the investor the assurance that the tenant is committed with the property for the long term. Different than multi family, as an example, in which leases renew every year, triple net property leases are made at longer term, and are made to give both the Tenant and Landlord a long term commitment with the property. Moreover, most leases include rental increases that serve as hedge for inflation, and automatic renewal options in which the tenant can continue extending the lease every five years without modifying the original lease. However, it is important to highlight that the renewal options are discretionary, so the Tenant is not obligated to exercise them.

4. Tax Benefits and Depreciation

Another excellent benefit of buying a triple net property is the tax benefits that comes with the opportunity to depreciate the building, which will reduce your taxable rental income. Depending on the particular state rules, some states allow you to take an accelerated depreciation, which means you can deduct a higher percentage annually, which can substantially reduce your taxable rental income. It is important to highlight that the depreciation benefit does not apply to ground leases, it has to be a fee simple ownership in which you own both the land and the building. Every state and the IRS have different rules for the depreciation allowance, so it is important that you consult first with your accountant or tax attorney to get more information on the specific rules for the property that you are interested. 

5. Ideal for 1031 Exchange

Buying a triple net property is an ideal option for your 1031 exchange replacement property. Nowadays, many investors are deciding to choose a single tenant triple net property as their replacement property for the simplicity and convenience of owning a truly passive income investment with no landlord responsibilities. In addition, if you are considering retirement, buying a triple net property is an ideal option to have a steady and fixed income without landlord management involvement.

In summary, a triple net property is an excellent alternative for the investor that is looking for a truly passive income investment without the management responsibilities. There are also risks involve in buying a triple net property that we discussed in our previous blog post Top 5 Risks of Buying a Triple Net Property.

At Casablanca, we specialize in selling Triple Net Properties. We have helped many clients in finding and negotiating the best triple net property according to their goals and risk tolerance, and we would be glad to assist you as well. We have the patience and expertise to work with our clients at their own pace.

Why Choosing to Work with Us as Your Buyer’s Broker?

• Free Buyer Representation, so you get our expert advice at no additional cost to you.
• Up to $10,000 credit for Buyer’s closing costs.
• We specialize in representing NNN Buyers and 1031 Exchange Investors. We represent your interests as a Buyer exclusively, not the Seller.
• We assist you with market research, property evaluation and selection, offer submissions and negotiations, due diligence and closing.
• Extensive access to property listings through our network of broker colleagues, property owners and developers.
• Our main goal is to find the best property for you at the best price.

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Read Our Full YouTube Videos Legal Disclaimer Here

Legal Disclaimer: Nothing contained in this video and written article should be interpreted as a recommendation or endorsement to purchase, sell, or invest in any specific property or security. The opinions expressed in this video by Alejandro (Alex) Casablanca are personal opinions based on experience as a practicing Licensed Real Estate Broker in Florida, and they do not constitute investment advice nor recommendations to buy or sell any property. Viewers should not rely on any statement made in this video and written article as a guarantee or representation that any particular property or investment strategy is a suitable investment. Opinions expressed in this video and written article are based on information available at the time of recording and are subject to change without notice. Prospective investors must conduct their own independent due diligence and consult with licensed financial, legal, and tax professionals prior to making any investment decision. Investment decisions should be based solely on each individual’s financial circumstances, objectives, and risk tolerance. The Triple Net real estate market is constantly changing and evolving. Changes in tenant financial condition, market conditions, demographics, technological innovation, monetary policy, consumer behavior, and broader economic trends may materially impact property value and performance. A tenant considered strong at the time of recording may experience financial distress in the future, which could adversely affect your investment. Neither Alejandro Casablanca nor Casablanca Commercial Real Estate LLC provide investment advice or assume any liability nor responsibility for any investment decisions made by viewers. For more information, read our YouTube Videos Legal Disclaimer here.