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.