What is a Triple Net Lease? Here is a quick look at how NNN leases are defined.
Thanks to all the listeners of the 1031 Exchange Passive Income Series on itunes and other podcast sources.
And thanks for the calls and emails from our listeners. Glad we can answer your 1031 exchange and triple net questions.
Here is the new page with all the podcast show links as well as links to itunes and stitcher and youtube etc:
When making an offer on triple net property you should first assess the asking price relative to the market.
If the NNN property is priced right, a good first offer is 90% + of ask price. This will still allow room for you to get a deal on the NNN property but also ensure the seller responds. Thomas Morgan, CCIM of 1031Navigator.com shares some offer info on a $6MM+ NNN 24 year CVS NNN property he is working on.
For a FREE 1031 Strategy Session call 1-866-539-1777 or go here.
1031 Navigator helps investors nationwide find the best 1031 Exchange replacement properties in the shortest amount of time.
Our focused expertise, experience and daily triple net market presence enables clients to complete their 1031 Exchanges with peace of mind and certainty. 1031 Navigator has been involved with over half a billion dollars of 1031 Exchange NNN Properties in over 30 states.
1031 Navigator is a service of Andrus & Morgan Co., a national commercial and investment real estate brokerage specializing in passive income investments.
For a free, no-obligation 1031 Exchange NNN Property Strategy session for your 1031 Exchange visit:
Beware of advice like this. https://twitter.com/WORLDBESTLAW/status/659204367224967168
The issue is not the tweet but the actual article which states:
An attorney is such a “qualified intermediary”. A 1031 lawyer will prepare your 1031 documents and will facilitate the entire tax free transaction. It is very important that a professional such as a Lawyer facilitate the transaction because firstly if any mistake is made on the transaction or the paperwork with the transaction that needs to be filed with the IRS you will lose your tax free status. Also, the IRS regulations state that the money received from the sale of your current property must not be “touched” by you as the owner. It must go directly to the “qualified intermediary” who will then provide the funds for purchase of the new property. The mechanism of a 1031 exchange is quite complex however by utilizing a Lawyer to facilitate the transaction is a very efficient and cost effective way of performing the 1031 tax free exchange.
Let's be clear.
Attorney's can act as 1031 qualified intermediary.
Just don't use your attorney.
Treasury covers this in Reg. 1.1031(k)-1(k)(2).
Patrick Harrigan, President/COO and a Certified Exchange Specialist at Gain 1031 Exchange Company, LLC covers this really well here:
The Role of the Qualified Intermediary in a 1031 Exchange: Who Can Audition?
This is what he says:
The Treasury Regulations state that someone who has acted as the taxpayer’s employee, attorney, accountant, investment banker, real estate agent or broker within two years prior to the date of the closing of the sale of the relinquished property is the agent of the taxpayer and is disqualified to act as the intermediary for that taxpayer. This means a seller of property cannot have their attorney, real estate agent, etc. hold their proceeds if they intend to complete a 1031 exchange. Also disqualified are all attorneys in the same firm as the seller’s attorney and any real estate agent in the same brokerage as the seller’s real estate agent. The regulations then proceed to state two exceptions to the disqualification of an agent.
Exception 1 The regulations except out services that are routine financial, title insurance, escrow or trust services performed by a financial institution or title insurance company. Thus, those businesses do not become an agent of the taxpayer based on their routine activities and are allowed to act as intermediaries.
Exception 2 The regulations also except out services performed by the agent “for the taxpayer with respect to exchanges of property intended to qualify for nonrecognition of gain or loss under Section 1031.”
Any extra work to do this is sure to be less than that of an IRS challenge or a voided 1031 exchange.
We recently closed a small 1031 Exchange Replacement Property retail deal in Denver. As a way of saying thanks to our clients for the business we give them an option of making a donation on their behalf to a cause of their choice or doing a normal closing gift like Wine of the Month or dinner etc.
This client chose to support The Wounded Warrior Project.
What nearby deal is a good NNN real estate investment?
TMO plays a game of deal roulette and looks at a net leased NNN Dunkin Donuts property for sale with 9 years on a absolute triple net lease.
It is a nice NNN building in downtown Phoenix, an attractive piece of real estate. It features a great location on 16th St and Bethany Home Road NNN Dunkin Donut For Sale which is quite a busy intersection with high traffic volume and a number of other properties nearby.
However, it has pretty aggressive cap rate and high per square foot rate, but it looks like it could be a good deal.
The price is $2,375,000
Deal Roulette rating is A- to B+.
About the NNN Dunkin Donut For Sale Tenant:
Dunkin’ Brands Group, Inc., together with its subsidiaries, owns, operates, and franchises quick service restaurants under NNN Dunkin’ Donuts worldwide. The company operates in four segments: NNN Dunkin’ Donuts U.S., NNN Dunkin’ Donuts International, Baskin-Robbins International, and Baskin-Robbins U.S. Its restaurants offer hot and cold coffee, donuts, bagels, muffins and sandwiches, hard-serve ice cream, frozen beverages, baked goods, and other products. As of February 10, 2014, the company had approximately 11,000 Dunkin’ Donuts restaurants and 7,300 Baskin-Robbins restaurants, which are primarily owned and operated by approximately 2,000 franchisees, licensees, and joint venture partners. Dunkin’ Brands Group, Inc is publicly traded on the NASDAQ (DNKN) with a market capitalization in excess of $4.5 billion.
I’m in Northeast Boulder Colorado hunting for a 1031 exchange replacement property.
Within a few blocks of me, I had a choice of an Office Condo, Industrial Land, and an Office Building with potential redevelopment opportunity.
I chose the third option as it seems to be the best location and have the most upside along with cashflow:
- 3000 Pearl Street cor 30th Street (1031 Replacement Property Link)
- 13,000 SF Bldg
- Office Building with potential redevelopment opportunity
- $250 / foot
- 4 story building redevelopment possibility of 70,000 SF in total
1031 Exchange Replacement Property near the following:
- Barnes and Noble
- Chase bank
- Whole Foods
Overall, it’s a solid 1031 opportunity for those looking for 1031 exchange replacement property.
TMO is pleased to have represented a private investor in the purchase of a NNN leased Tractor Supply property in Texas. The all cash transaction closed in under 30 days for $2,242,500 at a cap rate of 8%.
"Tractor Supply (TSCO) is a great reliable tenant with a solid business model which provides my client with peace of mind for years to come." says Thomas Morgan, CCIM. "TSC's may be in smaller markets but that is where their customers are and they serve the rural farming towns perfectly. Compared to a NNN Walgreens or fast food NNN investment, TSC's have a lot of residual value in the real estate as they are on large lots, usually 4-5 acres and have decent size buildings of around 20,000 sf built of block."
Marcus Millichap represented the Seller.