The hallmark of Single Tenant NNN properties is a steady and stable return combined with low risk. In this case, typically, an investor could invest in the underlying lease when a national tenant leases a real property, for a long lease term, and absorbs all capital and operational expenses and insurance, related to the property.
To invest profitably, select a national tenant with excellent credit ratings, as it will ensure a steady income with minimal chance of default. A credit rating of BBB- or higher from credit rating agencies such as Moody’s and Standard & Poor’s is best. Many investors see investment-grade Single Tenant ( Invest in Single Tenant )property as an alternative to bonds, producing a steady return with very little risk given that the tenant pays for property taxes, insurance, and maintenance.
The best way to minimize risks in acquiring such properties is to conduct due diligence for a true NNN lease. A true NNN lease is one where the tenant pays ( local tenant ) for all property taxes, insurance, maintenance and repairs, and all other property upkeep costs.
Along with knowing what is in the lease, due diligence includes inspecting the property as well as evaluating historical and future property value and risks. Vacancy, default, or nonrenewal of a lease are real risks and require full consideration.
Whilst national tenants usually have excellent locations( regional tenant ), Invest in Single Tenant NNN lease(excellent credit ratings) that has strategic significance to other assets in a portfolio, is advisable.
To fully understand investment risk and select a good Single Tenant investment property, a detailed review should consider:
1.Credit rating of the Tenant and of the lease guarantor
2. Lease Term
3. Type of Tenant – local, regional or national
4. Vacant and “dark” property analysis,
5. State of the local and regional economy, etc.
For the best insights on making a single-tenant property investment, contact our expert advisors at the Triple Net Investment Group.
