Diversifying your investment portfolio is one of the best ways to secure your financial future. According to financial experts, doing so allows you to manage risk while maximizing returns. If you are an older investor, it enables you to preserve capital, making it a good decision for newly retired people. Meanwhile, younger or first-time investors may find that diversification can make investing more enjoyable since it enables them to research and discover new opportunities.
Most people invest in emerging market stocks, government bonds, domestic corporate bonds, real estate, international stocks, and others to have a diversified portfolio. One of the downsides of diversification is keeping track of all of these simultaneously. Moreover, it can be expensive too. That is why wise choices in managing your time and finances are essential.
One of the best ways to guarantee maximum return is by including NNN properties in your investment portfolio. Whether you are a long-time or new investor, you can experience the benefits of this type of investment in different ways. So let’s discuss the key benefits of including NNN properties in your investment portfolio.
What is an NNN Property?
An NNN or triple net lease property is a lease agreement wherein the tenant takes on all the financial responsibilities of a landlord. This lease financial agreement includes paying the rent, insurance premiums, and property taxes. The tenant also pays for the maintenance and repairs the building or property may require throughout the lease term.
A triple net lease is one of the most simple and easy-to-understand leasing agreements for the landlord and tenant since the latter handles all of the operational costs and primary responsibilities for the property. Some established businesses, such as Walgreens, offer triple net lease properties at reasonable rates. To learn more about purchasing a Walgreens as a franchise, you can visit Pharma Property Group.
Benefits of an NNN Property
Like any other type of investment, a triple net lease has its pros and cons. However, its advantages far outweigh the negatives, both for the lessee and the landlord. Since an NNN offers a favorable outcome for both parties, there is less room for disputes, and investors can focus more on growing their portfolios. In addition, the lessee understands the financial requirements of the lease.
Control Over Utility Costs
Once an investor takes over a triple net lease property, they will have instant control over the cost of water and electricity. This control means they can put in systems that will enable them to save energy and water. Green initiatives such as solar panel installation not only help a business to lower energy costs but also allows them to improve their brand reputation. Moreover, being viewed as an environmentally-friendly business may help increase sales since studies show that more people choose to buy from companies employing sustainable solutions or offering eco-friendly products.
Pay Lower Rent
Triple net lease properties tend to have lower rental rates since the tenant is covering the expenses usually taken care of by the landlord. For some lessees, landlords will modify the lease to ensure tenant retention. Therefore, landlords can offer special rates to dependable tenants. Since landlords know it can be challenging to find good tenants willing to lease an NNN property, they tend to keep the rates low since doing so would be infinitely better than having a vacant building. In addition, having a continuous tenant ensures the property is well maintained and the lessees pay utilities and property taxes.
To be given the privilege of getting lower rental rates, tenants must invest time to ensure that the business is running smoothly in all aspects. They should also prioritize any structural repairs and keep the building in good condition inside and out. Also, it is critical to pay property taxes and insurance on time.
Allows You to Bring Your Vision to Life
Typical commercial lease agreements usually do not allow tenants to modify the property, even if it means adding features to enhance safety or accessibility. But with a triple net lease agreement, tenants get absolute control over the business’ exterior and interior design, meaning they get to bring their vision to life. Lessees can change the building’s paint colors, plant greenery or have their outdoor area professionally landscaped, or add accessibility features like wheelchair ramps to keep customers happy without disagreements with their landlords.
Have a Steady Income
Triple net leases make profitable and stable investments since the very nature of this lease agreement sets up tenants for business success. An NNN property agreement contract is usually in effect for 10 to 15 years, and depending on the type of business, investors can make close-to-accurate forecasts of return on investment and business growth. Moreover, since the locations of these properties are in areas with a lot of foot or vehicle traffic, they tend to thrive, even during an economic crisis.
Getting available financing also is easier since lenders are familiar with this asset type, especially if they connect the leased property to an established brand or business. Since NNNs are highly stable, they are great for anyone who wants a low-risk investment with maximum growth potential.
Become an Asset to Your Community
Triple net leases can only be used in commercial properties such as malls, industrial parks, grocery stores, retail stores, and pharmacies, to name a few. Investing in the right one can make you an asset to your community, primarily if your business provides products or services that can make a difference in people’s lives. For instance, an NNN pharmacy property in a town far from a major city can help the locals stay healthy, and they would not have to go far to access life-saving medication. In addition, they will also become more aware of their health and can talk to pharmacists about the right medicines for specific conditions.
Investing in a triple net lease property allows you to diversify your portfolio and have a low-risk investment that guarantees good returns. If you want total control over your business premises and earn a steady income, consider an NNN property to secure your financial future.