Passive Real Estate Wealth

In this article, we discuss key points of a 1031 Exchange and buying a triple net retail property. Plan in Advance Planning in advance is a crucial element of a successful 1031 exchange. Once the property is sold the 45-day ID period begins and typically the family decides to take a vacation to celebrate. The issue is that the seller only has a few weeks to identify which property they would like to purchase in the exchange and after the vacation, no properties have been ide

I have often received calls over the years and talked to many thousands of investors. The initial call and inquires seem to have a common theme. The callers often say they are hearing of STNL NNN for the first time or have heard about it from a friend or colleague but are not quite sure what it is. They want more information to explore and learn what STNL (Single Tenant Net Lease) is. Single Tenant Net Lease is a tenant that solely occupies a free standing building. Most si

Often times I hear potential clients wondering what they should be looking for in a single tenant NNN broker? To know what to look for you have to understand the commercial NNN STNL space and how transactions happen which not a lot of people talk about. On the listing side with most major firms their structure is set up like this. If commission to the brokerage is $100,000 on the seller side of a transaction then about 50% ($50,000) goes to the main brokerage and the remainin

With real estate there are stabilized full value properties for purchase and then there is Value-Add. With STNL NNN there are lots of ways to add value to a property. Ground lease — Buy the land only. Since only buying the land the rents are typically 50% below market value. If tenant ever leaves, you can release to market absolute NNN rents because usually you get the building the tenant constructed for free. Buying an absolute NNN STNL property with an in-place lease and

If someone is an accredited investor they often get on people’s lists and get pitched all kinds of proposals for investments. Many are not even in the real estate realm. These companies are often wanting to talk an investor into buying anything at anytime. The more important question is for the investor. Do they like the track record of the sponsor? Do they like the type of strategy the sponsor is wanting to deploy and execute on? Do they believe in the sponsors vision and h

What is a syndicate? A syndicate is usually a structure whereby passive investors that are limited partners (typically accredited) invest in a specific property where the syndicator is the general partner. The general partner is the one who makes most of the decisions with the syndication. The syndicator puts out a flyer or offering about the specific property they want the passive accredited investors to invest in. The syndicator then fields inquiries about investing from

Owning a MTNL NNN property can often times be very rewarding but requires considerable more effort than a STNL NNN property. The misinformation is that there is nothing to do with research when buying a NNN MTNL property. There is a lot of review and steps that go into buying a good MTNL NNN property. Notice I said a good property. There are tons of mediocre to bad properties out there where a buyer could lose some or all of their down payment investment. Those are easy to bu

An MTNL NNN broker can have very different traits from an STNL NNN broker. MTNL NNN listing brokers often provide a package of services to property owners. In addition to selling a property for them, they also might do property management on the retail center and also leasing up of some of the empty spaces. Since these listing brokerages are often doing multiple functions at the same time they tend to be not as efficient as a transaction broker only, as their time is stretc

The financing for centers varies greatly in comparison to single tenant properties. That is because, as you can imagine, instead of one tenant there could be anywhere from 2 to over 100 at a specific development property. So that can place tons of variables that alter what a lender will do for a loan on a property. In certain lower prices ranges of retail centers, say $2 million up to $10 million, most lenders are credit unions, local, regional, and national banks. With r

There are many variations and styles of retail centers that have been built over the last 50 years or so. Some different types of centers go in and out of desirability based on how people are choosing to live, and it changes over the decades. The Mall I remember growing up in the 1980’s you mainly had big enclosed malls. In smaller suburban areas that were emerging and growing, my parents drove me once every 1-2 weeks to the mall and it took 45 minutes to get there. Before t

A multi-tenant net lease (MTNL) is when you have more than one tenant, typically in a retail center, (although you could also have multiple tenants that are NNN in a medical building or an industrial building). The most common is a retail building. Unlike single tenant where all the income relies on one tenant, in multi -tenant the income is generated from multiple business owners. That can be a positive or a negative based on the tenant credit quality and structure of the l

People are often intrigued by hearing about STNL NNN but what does it mean? What kind of returns can you get? What is an active versus passive investment? Active investments tend to be real estate asset classes where you have to work and deal with headaches for yield. Those properties take up so much of your precious time and life force where you are dealing with constant problems instead of creating amazing life experiences and memories for yourself and your family. Exampl

The 1031 Exchange can be one of the most important tools in an investor’s investing career. One of the main benefits is to defer taxable gains. When you own a property over time you can typically take a certain amount of depreciation on the property depending on the asset type. Different asset types have different depreciation schedules. There is also bonus depreciation available currently (tax laws are ever changing so consult your CPA for the latest information). To maximi

The 1031 exchange, also known as a like-kind exchange or tax-deferred exchange, is a strategic tax planning tool that allows individuals and businesses to defer capital gains taxes on the sale of certain assets, such as personal property or business real estate. This powerful mechanism is popular for its potential to help investors preserve capital and facilitate the growth of their portfolios. Regarding how the 1031 exchange works, particularly when using the proceeds from t

In real estate... what is that saying? Location, location, location! Whether residential or commercial the same rings true. Desirability of a location comes down to positive attributes that the tenant or property owner is looking for. Generally unless you live in a rural area and understand the nuances of that area to a high degree of knowledge, most buyers stay out of these locations for investment purposes. Rural locations to weak (small) suburban areas often carry the m

It is important when looking at buying a NNN STNL property that a purchaser can analyze the strength of the tenant for security of the passive cash flow stream over time. The purchaser wants to feel comfortable that their investment is sound and will be successful over the long term. You have 3 main rating agencies that underwrite public companies for businesses: Standard & Poor’s, Moody’s, and Fitch’s. Most NNN lenders look at Standard & Poor’s ratings. Statistically the h

Investors often think of STNL as generally passive but do not have as clear of an understanding to the types of lease structures available and what that means. Here are the various types of leases you might come across when searching for a NNN STNL property. Absolute NNN This is where the tenant pays for everything with a property, and the landlord is completely passive. The tenant takes care of insurance, property taxes, maintenance to the property, etc. This structure is

When it comes to the world of smart investing, there are a few things that we need to first discover. To start this discovery, let's first ask the following questions: Are your current investments creating you headaches because they are so much work and energy just to see the fruit of the investment - costing you much labor, stress and personal involvement? Are your cashflow sources volatile, ever changing, sometimes unstable? Do you experience tremendous pressure to keep a b