Value add opportunities in NNN?

6 Replies

In commercial multifamily, value add opportunities may allow for a cash out refinance that helps cover the downpayment towards the next property. In this way, people scale their portfolio probably more quickly than they would if they just saved up money from their day job, and can theoretically get to six figures "passive" income relatively quickly.

Does the same work for NNN properties? Are there value add opportunities in NNN?

If not, what are some strategies that people use to grow their NNN portfolio? Is it all generally through syndication/pooling money together?

Is it possible/likely to attain a six figure "passive" income within 3-5 years doing NNN deals?

Obviously, the relative passiveness of NNN is appealing to me, but I'm starting to think NNN is more for long-term and steady wealth-building, rather than for big and quick returns.

You can absolutely do value add.  That’s been our strategy and it’s worked great.  You definitely need to understand how long a building can sit vacant.  We assume 2 years before we get a new tenant and a good amount of landlord paid build outs.  Generally, how much cash flow you can make depends on how much cash you’re bringing to potential deals to get into larger purchases.  It’s definitely possible to get into 6 figures even without syndicating.  

@David Babayev with existing long term NNN leases value add is hard and returns are usually low, think cvs, Starbucks etc.. So big gains are unlikely. If you buy something and then add value including signing a new NNN lease with a long duration of 10+ years it can be a home run.

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Originally posted by @Greg V. :

You can absolutely do value add.  That’s been our strategy and it’s worked great.  You definitely need to understand how long a building can sit vacant.  We assume 2 years before we get a new tenant and a good amount of landlord paid build outs.  Generally, how much cash flow you can make depends on how much cash you’re bringing to potential deals to get into larger purchases.  It’s definitely possible to get into 6 figures even without syndicating.  

Thank you for your input, Greg! That's great to hear. Would you be open to chatting more about this offline? I will ping you on messenger as well!

Originally posted by @Ken Naim :

@David Babayev with existing long term NNN leases value add is hard and returns are usually low, think cvs, Starbucks etc.. So big gains are unlikely. If you buy something and then add value including signing a new NNN lease with a long duration of 10+ years it can be a home run.

Thanks so much for sharing your insights Ken! 

Originally posted by @Ken Naim :

@David Babayev with existing long term NNN leases value add is hard and returns are usually low, think cvs, Starbucks etc.. So big gains are unlikely. If you buy something and then add value including signing a new NNN lease with a long duration of 10+ years it can be a home run.

Thats just one segment of the NNN leasing asset. Specifically, you're only referring to absolute NNN and those properties are so standardized and credit rated, thats why they have slim margins--much closer to bond trading.

As Greg noted, it absolutely can be done on regular office, industrial, retail sites. The numbers are bigger, vacancy risk is longer, and capital needs are much higher. You can buy any single tenant warehouse now, 6-7 cap, put down $800k and cash flow $60k after debt, triple net and super easy management.

Yes you can make money in value add NNN. I am doing it now.

People that are accredited might have the opportunity invest in my value add retail deals I syndicate if they invest the minimums I require.

I make money brokering buyers purchasing long term investment grade NNN. I take that money and roll into my own investments and possibly syndicate depending on the deal.

I am have ZERO interest in helping others find a deal to make 500k to 1 million profit when I would only make 15k commission on the deal.

I make six figures per deal brokering and then even more buying my investment properties but I have been in this business about 18 years and have built the relationships.

Good luck