NNN 1031 Exchange Blog

Florida NNN Properties for 1031 Exchanges

Net Leased Properties Are A Powerful Tool For Creating Wealth

Written By: Patrick Moorton - Mar• 03•12

The real estate market conditions over the past several years caused quite a few real estate developers and investors to lose a great deal of money. Even some of the most experienced and successful developers suffered financial difficulties.Wall Street investment bankers jumped into the market. They had easy access to capital they began overpaying for properties in almost every asset class. They made their money by creating mortgage backed securities and other complex financial instruments. They paid enormous prices and seemed to disregard the fundamentals of real estate investment.

Why would any body want to own high risk properties that are difficult to manage and subject to market fluctuations at very low returns? The answer is simple; they were using other people’s money. They had access to grandma’s pension fund and apparently had little regard for the long term welfare of the beneficiaries of these funds.It is unbelievable that so many investors are willing to put their money into the hands of an industry that bet grandma’s farm and lost it. Only on Wall Street can investment bankers lose billions of dollars for investors and then get a contract to manage a State pension fund worth billions for retirees.

What can an investor do to take control of their financial future?

You must maintain control over your assets. It is wise to get investment advice from professionals but don’t give up control. One asset class that has endured the test of time is the Single Tenant Net Leased Property with credit worthy tenants. These properties are for investors not speculators. Even during the financial crisis large public companies like Walgreens, CVS, Bank of America, 7-Eleven, and McDonalds continued paying rent on the properties that they were leasing. The owners of these properties were still getting their rent checks every month because these properties are a vital part of their tenant’s business operations and they depend on sales from their retail locations for their cash flow.

Now that land prices have fallen to more reasonable levels, companies with strong financials will begin to expand again at a careful pace. Their cash reserves are now best spent improving their operations and low interest rates will allow them to take advantage of market conditions and pick up some great new sites that may have been abandoned by other retailers when the markets were in crisis.

Investors in Single Tenant Net Leased Properties will have an opportunity to acquire new properties as these firms begin to build more stores. Prices have been rising on these properties as demand from investor’s increases. Insurance companies and Real Estate Investment Trusts have allocated billions of dollars to acquire net leased properties.

Insurance companies are frequent investors in mortgages for single tenant net leased properties with credit tenants. They also buy them free and clear of debt to fund their long term obligations to policy holders and investors.

Single Tenant Net Leased properties have been used by high net worth investors to set up long term reliable income streams for estate planning purposes for many years. These properties are for long term investment to build equity over time. Using conservative leverage an investor can get a self amortizing loan that will provide a steady income and pay off the property over the term of the lease.Careful consideration of the credit worthiness of a tenant and location of the property are extremely important to make sure that the tenant is in a location that will be a profitable one. It is to the investor’s advantage that these companies have site selection down to a science and in most cases they can tell by the demographics and traffic in a location whether or not they will be successful at a particular location.

The goal of buying a single tenant net leased property is to provide a reliable income stream for you and your family. If you focus on prime locations and pick the best of several available, your chances of having a great long term investment will be increased.  Owning real estate in a prime location with rent guaranteed by a billion dollar corporation puts you in control of your assets. Net leased properties offer the owner an opportunity to build equity of a long period of time with little or no management responsibilities. A good net leased property can help you carefully plan your financial future.

Patrick Moorton is President of Income Realty Advisors Inc. Owner and operator of NNN1031Exchange.com, an online resource for investors buying and selling Single Tenant Net Leased Properties with Credit Tenants in Florida. For more information please visit http://www.NNN1031Exchange.com

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