NNN leases - any hidden costs?

3 Replies

I'm doing my first 1031 exchange. Selling my multi family in Oakland CA and looking to exchange into an out of state NNN lease.

What are the key factors to consider when looking at a property?
Are there any hidden fees or restrictions to be aware of when running the numbers?

You have to read the lease. Although its a nnn lease it may call for you to cover expenses Out of pocket and get reimbursed later by the tenant (ie taxes). Some nnn leases have goodies like giving the landlord an administrative fee on top of reimbursable expenses. 

Each lease is slightly different. Try to look for a credit tenant on a long term lease in a good location. 

Hi Jessica,

Yes tons of things to consider on NNN. I will probably write a book one of these days when I get some time.

First question:

Single tenant NNN


Multi-tenant NNN??

Second question:

How much are planning on putting for down payment??

Different asset classes of NNN have varying dynamics with primary lease length term, NNN,NN, or ground lease, down payment percentage, rental increases or not in primary term, cap rate range, typical purchase price range, guarantee level of the tenant etc.

You just need to hop on a call with someone and then take a bunch of notes. It's much faster that way for you to get info .......... : )  

1 advice, consider how much that same building would be worth if it were vacant, then analyze the risk of the tenant splitting overnight, no matter how big the tenant is, it's always possible.

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