Find out how to get the best 1031 NNN Properties on the national market delivered to you at no cost!
Today we look at if the Lease is really triple net? Is it absolute net, triple net or double net?
In NNN investing, the lease is one of the most important things. The point of investing in NNN properties is to have a "hands off" investment.
When buying NNN properties make sure to read the lease to see if it is really true NNN or not.
Many triple net brokers and NNN sellers will advertise the lease as "net leased" or "ease of management" or "minimal landlord responsibilities" . Often times the lease will have more landlord responsibilities that advertised.
In this Video and Audio Q&A Thomas Morgan, CCIM of 1031navigator.com talks about absolute net leases, NNN leases, and NN leases.
Beware of opening escrow without having read the lease to see if it is triple net or not. This will save you time and money on your 1031 exchange NNN property purchase.
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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.
Just in.... 1031 NNN Property Want/Need.... This VIP client is the son-in-law of a long time Exclusive client. We have sold his father-in-law almost $30M worth of NNN properties in several states over the years. (Find out about the VIP and Exclusive Buyer programs here)
“Hey Thomas, I have 600k to 800k laying around that I need to get out of the bank and into an income property. Can finance if needed up to, let’s say, $1.5M. It is a partial 1031 exchange so would like to do something sooner than later. I like what you found my father-in-law for his 1031 exchanges and other investments. The triple net properties really appeal to me. Would like to get as high as cap rate as possible, can go anywhere in US. OK with some risk as I am still young and not afraid to get after it if needed. However, would not mind sitting back and just collecting a monthly check! Thanks, AG”
Today’s Deal Rundown
MAYBE - Denny’s in Ohio, $1.76M 6.25% cap rate. Pros: Advertised as absolute net with 13 years on term and strong store sales. Good demographics. Larger, almost 1 acre lot. Strong traffic counts of 31k. Cons: old building - 1970 Status: confirming who guarantees lease and last remodel and to what extent.
MAYBE - 7 year leaseback Boise NNN office $1.16M Pros: curb appeal, 7 year dress lease, 7% cap ask price, $200 psf, downtown location, high population growth, decent size western MSA, nice bite size deal Cons: small .28 acre lot, tenant strength Status: checking on who tenant is, needs more in depth location and market rent analysis
OF INTEREST - 15 year Grease Monkey in IL Pros: new 15 year absolute net lease, low price point of $620k, under $200 psf, corporate lease, 10% bumps, new branding and remodel. Cons: maybe franchisor/franchisee issues, single use building, lot size unknown (for now), unable to assess exact location
PASS - 20 year NNN Salad N Go PHX $1.28M @ 6.8% cap Pros: nice long term absolute net lease. Good location. 2% annual bumps after year three. Cons: small building size of 677 sf puts sale price psf at $1,890! Also puts rent at $128 psf annually! Yikes! Also only has operator guarantees.
PASS - Verizon NC - 9 years left on 11 year lease $1.74M 6.25% cap rate Pros: 9 years left with 600 unit operator. Advertised as NNN lease. New construction 2013. Good highway frontage near Wal-mart. Close to the Western Carolina University, having more than 10,000 students. Cons: high psf of $500. Negative population growth for area. Boonies of NC. Town of only 2,500 people (more in outskirts but still small). Away from main population base and highways especially for a 6.25% cap rate. Flat lease with only 5% bumps in options. $31 psf net rent which would be hard to replace.
PASS - Chase Bank Ohio $600k Pros: long time operation at this location, 26 years, under $200 psf, ok cap for national bank at 6.75%, low $13 psf rent, Chase remodeled in 2015 Cons: 1988 construction, some landlord responsibility, only 4 years left on lease, negative population growth
Off to a good start! However, amazing how many NNN deals look great on the surface only to find out they have major flaws.