Things To Know About NNN 1031 exchange properties

by Lisa taylor Tax consultant

Here at 1031sponsors, we help real estate investors with 1031 Exchanges. There are many 1031 Exchange options, and we are here to discuss each one with you, along with your current and future goals as an investor, to see which option is best for you. Today we will discuss Triple-Net or NNN 1031 exchange properties.

A NNN lease is ideal for investors or the taxpayer who are looking to own less work escalated properties. If you’re tired of managing with the three T’s, toilets, trash, and questionable tenants, then perhaps you’re prepared for some class “A” tenants with little to no work requirements in a “turnkey” investment!

With a NNN lease, you are yet a landlord, but here the tenant is ordinarily responsible for insurance, taxes, utilities, rent, and maintenance. As the landlord, he enjoys a high level of cash flow and income without the tension of maintaining the building.

To obtain this type of passive ownership, you need greater financial investment, to begin with, with a net worth of minimum $1 million, excluding the value of your primary residence, or $200,000 of income. The leases are generally for a period of 15-20 years. Many well-known retail organizations may choose to renew, providing you with consistent income. Examples of tenants include drug stores, like Walgreens or CVS or Walgreens, auto part stores, like NAPA, or fast food restaurants, like Burger King or McDonald’s.

Generally, there is no co-ownership in a NNN 1031 exchange properties, and you solely own the property. However, a DST may be utilized with the potential for greater diversification. This likewise also allows for smaller investors to participate.

Potential investment risks of a NNN lease emerge due to the low diversification and single-tenant situation. Even a publicly-traded and finally strong national tenant can go bankrupt, or they may choose not to renew after a long-term lease ends. The landlord will have to fill the vacancy, as it is either 0 percent or 100 percent vacant with only one tenant. It’s essential to understand the credit risk of the tenant before signing a lease.

It’s also essential to note that just because a lease is called a triple net lease, this does not mean that it is. Or, it might require landlords to fund some capital expenditures overtime on older buildings. It’s always important to read the lease and make sure you know exactly what you’re signing it for!

Do you think you might be interested in long-term, stable income with the possibility of capital appreciation? Are you done with the three T’s and are looking for a low-maintenance investment? Contact our team at 1031sponsors to see if a NNN 1031 exchange properties is right for you! We will answer all of your questions and help you find an ideal tenant to meet your needs through 1031 Exchange.