NNN Leases - Posted by James R. Cundiff

Posted by Coupon Clipper on January 18, 2008 at 05:47:55:

I have not taken the time to look at TICs but I intend to. I need to go have lunch with a friend who has invested in some.

One thing that I see as a big risk in NNNs is the lack of diversification, unless you have many such properties and they represent only a relatively small fraction of your portfolio. If you have one or two big single tenant NNNs and one develops trouble, you take a big hit. And for what, a 6-ish cap rate?

Instead of one NNN, it might make sense to invest the same money into 10 TICs. This could offer diversity of area, type of tenant, etc.

I see it the same way as having too much money invested in GE stock versus having a mutual fund.

Maybe this tells me I don’t have enough capital to be chasing NNNs. :slight_smile:


NNN Leases - Posted by James R. Cundiff

Posted by James R. Cundiff on January 16, 2008 at 21:16:39:

Does anyone have a story or stories of investors completing a triple net lease(s)with unbounded joy and enthusiasm for more? How did they make out on the residual value of the leased property at the end of the lease.

Re: NNN Leases - Posted by john

Posted by john on February 15, 2008 at 15:44:18:

NNN leases are great investments because they are long term investments with stable income. It’s a great way to annuitize some of your portfolio. (I have two of them) Although I’m not diversified, I only wish that my tenants would leave so that I could sell off the land for double what I paid for it. It’s all about the location. Always buy where the demand is! If you told me I could own a piece of manhattan for 5% cap…I’d take it!!
TIC is an affordable approach, but the problem is that you don’t have control over the property and there is not a secondary market for selling these things. Hope this helps.

Re: NNN Leases - Posted by George

Posted by George on January 23, 2008 at 16:34:31:

I haven’t been doing it long enough to know what a long-term investment a NNN will make post-lease. Location and building type of course will determine this. What I do know having owned a NN and then buying a NNN with the sales procedes of the NN is that I sleep much better at night. Every time I’d go to my P.O. box where I received mail on the NN, I’d open the box with sweaty palms. From needed roof repairs, to parking lot repairs, to painting the exterior of the building, to a crack in one of the beams, to a lady falling in the sidewalk wanting to sue. There are endless hassles anytime you own a property that requires maintenance, insurance and property tax payments. Own a NNN and you fill out a financial form once a quarter and do your inceom taxes. That’s about it. I’ve got a 25 year lease and a positive cash flow. Even if I don’t get the return I might otherwise have gotten, there sure is something to be said about “hassle free” investing.

Re: NNN Leases - Posted by Coupon Clipper

Posted by Coupon Clipper on January 17, 2008 at 20:16:38:

No, I haven’t heard any one way or the other. The deals you are talking about haven’t been around long enough in big numbers to be evaluated at the endgame. IMO.

I have anecdotally observed vacated K-Marts or big grocers, and they often sit vacant for a couple-three years, then end up getting some shaky local tenant. Not a pretty picture in my mind.

I think it is a much bigger gamble than what you get for the cap rate. What’s your take on it?

Re: NNN Leases - Posted by Matt

Posted by Matt on February 18, 2008 at 18:22:24:

5% cap in NYC done. I’m a commercial broker in Manhattan,
email me if interested.

Re: NNN Leases - Posted by James R. Cundiff

Posted by James R. Cundiff on January 18, 2008 at 04:54:41:

Thanks for your response.

My take is basically the same as yours. I have been beating my brains trying to determine how one can reliably forecast a good outcome with NNNs. I think of NNN’s as retirement vehicles. In this regard, TICs, albeit with their own limitations, offer stability in cash flow and retention of value, even appreciation, and so seem to me to be a better alternative. Having said this, I recognize that TICs require more due diligence, indicating perhaps additional risk.

Re: NNN Leases - Posted by john

Posted by john on February 19, 2008 at 17:35:40:

Okay, but my rules are it has to be under $700,000. The lease has to be short term (2 years or less), so I can jack up the rents. Still interested?