Commercial Real Estate Investment Options and Opportunities
Time for you to transition from Multifamily into Commercial Real Estate?
There are many reasons a multifamily property owner might consider moving into commercial real estate. The Oregon Rent Control Senate Bill 608 may influence some owners or maybe they are at the stage in their investment career where a passive property that takes less care would be the right fit.
If you are looking for an attractive commercial real estate investment opportunity, you might consider a triple net lease, otherwise known as NNN. These properties have a number of advantages for investors. One major one is the tenant is responsible for paying base rent in addition to taxes, property insurance, and CAM (otherwise known as common area maintenance for the property).
NNN properties tend to be nicely maintained properties, and they are often major businesses that you may be familiar with: AT&T, Verizon, Dollar General, DaVita Dialysis, Auto Zone, Advance Auto, and Valvoline Instant Oil Change to name a few.
Even better, NNN tenants are usually responsible for the majority of expenses, including building and property maintenance (sometimes the roof, which can be a big deal) and common area maintenance for items like garbage collection, landscaping, and parking lot maintenance.
Why Move from Multi-Family Investments Into NNN Properties
In this episode, René discusses why many of her clients are finding triple net properties an excellent alternative to multi-family investments. Part of the attraction of a triple net property or a passive piece of property rather than an apartment or a multi-family complex is there’s no government regulation on rent… Read More »
Benefits of Owning NNN Properties
- Typically, the tenants are nationally rated, corporately guaranteed tenants. If the tenant vacates the space, their corporate ofﬁce will continue to pay the rent.
- There is one tenant and one point of contact (low risk) versus many tenants (multifamily) with varied risk proﬁles.
- NNN tenants are not management intensive, whereas multifamily is heavy tenant management.
- NNN properties usually have longer leases; multifamily properties tend to have year-to-year leases.
- NNN is ideal for owners who want to be passive investors.
- NNN carry a reduced ﬁnancial risk because the tenant is responsible for the majority of property maintenance.
- NNN is easier to ﬁnance because the lease is longer term and corporately guaranteed, making it more favorable to lenders.
- These leases provide a stable income. NNN generally means long-term 100 percent occupancy. Most tenants stay longer and like to renew their leases, so they do not have to train their customers where to ﬁnd them.
See Why Others Transitioned Into NNN Properties
Multifamily Portfolio Exchanged Into NNN Investments
We facilitated a transaction of three 1031 exchanges for a client into a passive real estate investment portfolio of triple net assets. This deal more than met our client’s goals of getting out of the intensive management needs of their multifamily investment properties and getting in to “hands off” investments that would generate a steady income.
Dollar General is a national chain of more than 12,500 stores in 43 states. This NYSE-listed retail giant has a unique approach to retail that has found success, even as on-line retailers grow. We’ve matched a number of clients to Dollar General Dollar General facilities, each with a corporate guarantee.
Advanced Auto Parts
A national chain with more than 5,000 stores and more than 74,000 employees, Advance Auto is the largest aftermarket automobile parts supplier in the United States. Long-term corporate guarantees and stable income streams made them an attractive choice for several 1031 exchanges.
AT&T is a perfect example of the quality of tenant Pacwest looks for when we match our clients to triple net commercial real estate. A large prestigious telecom company, AT&T is excellent tenant. We have pair clients with them multiple times.
DaVita is NYSE-listed, with more than 2000 locations nationwide. We matched a client to a DaVita Dialysis property, adjacent to a major medical center with a 15 year corporate-guaranteed lease.
Questions or More Info
It may be time to explore commercial real investment. Oregon’s new regulations will definitely affect the operation of your properties as well as the overall value of your multifamily investments.
If you have any questions, concerns or would like to find out more information, please contact me at:
René Nelson, CCIM CRE 541-912-6583