If you’re looking to retire from active, property management and keep your invested money working for you, you should consider investing in NNN property. Financing retirement and estate planning are not for the faint-hearted. Our ‘golden years’ are becoming longer, as technology improves the quality of life and increases life expectancy. With 79 years becoming the normal life expectancy in the U.S., it is important to consider alternatives to the highly stressful, world of actively managed multi-family, office, medical or residential rental properties, or even, the non-collateralized, volatile “paper” investments of the stock markets!
NNN properties offer a relative, resilient, safe harbor – that is to say that these investment properties hold their value across up and down market cycles. Of course, NNN lease property investments offer stable incomes, without the headache of active management. Retirees can “monitor” remotely and thus freely enjoy your retirement years, with a monthly check in the mailbox. These properties are easily sold, or 1031 exchanged into from your existing portfolio, and can either be easily debt-financed, or bought for all cash!
A NNN lease property investor can invest in debt-free investment properties with no mortgage whatsoever! This means cash only NNN properties:
- do not carry mortgage risk,
- lack refinancing risk and
- can never be foreclosed
Here are some examples of all-cash, debt-free NNN lease property plays, where instead of selling the property at a loss or at a bad time in the market cycle, these assets were repositioned, re-tenanted and, generating investment performance and returns above expectation:
- This particular NNN property was well tenanted with a strong investment-grade tenant. However, the tenant’s credit rating was downgraded. Since the property was debt-free, a lender did not restrict cash flow until the tenant credit rating regained position.
- This NNN property national tenant filed bankruptcy and the investor could not re-tenant the property, but the property did not have to sell since there was no lender threatening:
a. immediate re-tenancy, or
b. debt repayment, or
c. foreclosure.
- Since this NNN lease property was owned debt-free, the investor held on to the property for a few extra years, beyond the recession in 2008 and sold it in a better market in 2013.
On the other hand, obtaining debt-financing for NNN lease property investments is a breeze. High credit scores are not a priority requirement because often the lender will look to the quality of the tenant’s credit, and the tenant’s guarantors, for collateral, rather than the borrower’s. Assume a self-amortizing loan for your NNN property investment, and off you go – you’ve got predictable income for up to 25 years and an asset that will appreciate right until the time you decide to exit or pass on the estate(NNN lease property investor). Your heirs will thank you for this “gift that keeps on giving” with low or no maintenance, should your heirs not be interested in further realty investments.
Note that tax deductions for investment interest expense are limited to your net investment income—that is, the debt service expense cannot be greater than the income generated from the investment(NNN property national tenant). But you may be able to carry over excess interest expenses to a future year’s taxes, thus sheltering future incomes.
For all your NNN lease property related inquiries, for all cash or debt-free investments, as the U.S. heads into possible recession, call your trusted brokers at the Triple Net Investment Group. We understand retirement and estate planning nuance to enable greatest investment passivity in your golden years. Call or email us today.
