NNN 1031 Exchange Blog

Florida NNN Properties for 1031 Exchanges

Net Leased Property Heats Up As Investors Look For Reliable Cash Flow

Written By: Patrick Moorton - Mar• 24•12

Imagine what it would be like having a multi billion dollar company send you a check every month for 25 years. Wouldn’t it be amazing if companies like Walgreens, CVS, McDonalds, 7-Eleven, Bank of America, or JP Morgan Chase were sending you a check each and every month?

Single Tenant Net Leased Properties with national credit worthy tenants have been long time favorites of Insurance Companies, Real Estate Investment Trusts, and High Net Worth Individuals. They buy them because they have long term leases with little or no management responsibility. The tenants are public companies sometimes worth billions and have excellent credit ratings.

Are you beginning to see how easy it would be for you to own properties like these?

No daily management, a billion dollar company as a tenant that takes care of all their own maintenance, taxes, and insurance. The property is a vital part of their business operations and they are very concerned about its appearance. It is a prime location with demographics that forecast high traffic and sales for the tenant. They pay their rent like clockwork each month and the steady cash flow allows owners to build equity consistently over the lease term. The value of the prime real estate and the excellent credit of the tenant should allow you to get very favorable financing terms. Conservatively leveraged, with a self amortizing loan, the property will be paid off at the end of the initial lease term. If they leave, you have a valuable asset that is free and clear of debt. If they stay beyond the initial term after the property is paid off, and many do, your investment returns are increased substantially.

It is important to invest in a location that is or should generate substantial sales for the tenant. If they are making a lot of money it is unlikely that they will leave after the initial lease term. A buyer of a net leased property should carefully consider the location that he wants to buy. It is possible to use demographic studies and mapping software to compare the attributes of several stores to determine the best one to invest in. The good locations with the best tenants are always in demand. They will also sell at a premium. It is usually worth it to pay a bit more to get a premium location. This will allow you to sell the property quicker if you decide to sell prior to the end of the lease.

The popularity of credit tenant net leased properties with investors has increased because many investors are receiving very low interest on their cash deposits. Net Leased Properties are a safe reliable investment alternative.There are many investors who may be selling their properties by the end of the year to lock in their favorable capital gains tax before the proposed increase in U.S. tax rates. This will create an opportunity for astute investors to purchase some great properties before the end of the year. It takes time to do proper due diligence and arrange financing for a purchase. If you are planning to invest in a credit tenant net lease property by the end of the year, you should look for a good investment immediately.

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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