Do you want to build wealth by investing in commercial real estate (CRE)? When you approach or are in retirement, would you like to diversify your investment portfolio? Are you interested in earning more every month? Compared to less stable investments, triple-net (NNN) lease investments are the safest, most reliable and most income-producing investments.
Following your CRE or NNN investment research but still not sure how to invest in Triple Net Lease properties?
Follow these 5 steps:
What is the minimum net worth required to invest in triple-net properties?
In general, NNN investors must meet a net-worth requirement. You may qualify for triple-net investing if your authorized net worth is $1 million, excluding your primary residence.
Investing requires an annual income.
There may still be opportunities for investment if you earn more than $200,000 annually but don’t have $1 million in net worth. This parameter will only be available if you have invested. Because triple net lease properties rarely require maintenance, you won’t have any unforeseen expenses necessary for a minimum monthly income if you pay all cash.
At what price can you enter the market?
The average price of NNN investment properties is around $1 million. Based on their median purchase prices, the following triple net lease properties have a lower entry barrier for newcomers.
- Millions of dollars exchange hands at dollar stores.
- Restaurants that serve fast food – $1.5-2.5 million
- Medical/healthcare – $1.5-2 million
- It is common for convenience stores to start at around $2 million.
What is the required down payment for a commercial mortgage?
It’s a scam if you see clickbait ads claiming there is no money down financing for your property. Typically, a financial institution requires a 30–40% down payment when you buy a NNN property and take on debt while maintaining liquidity in your portfolio. Based on tenant and tenant credit, length of lease, location, and other factors, NNN investment financing options and down payments vary case-by-case basis.
Your credit score determines finance.
NNN properties with one tenant have little effect on your credit score regarding financing. Most NNN properties have affiliations with major brands, which cover all property expenses regardless of the property’s condition. Therefore, the tenant’s credit is critical in determining the financing level. Leverage increases with better tenants. Besides the lease length, rent increases over the term of the lease, and location, other factors affect financing.
When deciding whether or not NNN investing is right for you, how do you evaluate your options? Before looking at properties, determine your lifestyle and wealth objectives, and assess your risk tolerance.
The most important thing when doing this is to be realistic and determine if you have enough capital to invest in NNNs and what you want and need from them.