1031 NNN Lease For Tax Deferred Exchange
Real estate investors have various different options for their investment money. In addition to 1031 exchange and Tenants In Common opportunities, investors can participate in other direct real estate investments, such as:
- Triple Net Lease Properties – NNN
- Real Estate Investment Trusts – REITs
- Diversified Funds and LLC
- Direct Investment into Tenants In Common Properties (non-1031)
A Triple Net Lease is one in which the tenant pays all the ongoing operating expenses and the landlord receives a net rent. It is the tenant’s liability to pay all the property taxes, utilities, insurance premiums, maintenance and repairs of the real estate property. In some cases, the triple net tenant even pays the interest payments on the lessor’s mortgage on the property leased.
The rents are usually lower in Triple Net Leases than other forms of lease agreements. The Triple Net Form of Lease agreement is considered to be optimal for real estate investors since the expenses incurred on the investor are dramatically reduced due to the transference of financial responsibilities on the property from the investor/owner to the rentor/lessee.
Advantages of Triple Net Leased property:
- The capital gains taxes can be deferred through a 1031 exchange.
- Triple Net Leases require no or very little involvement of the landlords.
- It is a liquid investment and has a high residual value.
- There are no vacancy factors, tenant improvement costs, management fees, or leasing fees.
- The Triple Net Lease Properties are usually in prime retail areas with excellent traffic counts and demographics.
- The tenants usually sign a lease of 10-25 years, which lessens the worry of the tenant turnover.
It is our goal to assist all potential commercial real estate investors in securing the right entity for their financial portfolio. We believe in building a relationship with our client and keep them updated on the net lease industry and 1031 market. We take pride in being their main source of information and opportunities related to the 1031 exchange.
For advice on 1031 tax exchange feel free to contact us.
This document/post/article is not to be considered as legal advice. Content and information contained herein is subject to changes, modifications, and may contain inaccuracies or out-of-date information. As with any legal matter or other matters of importance, consultation with an attorney or professional is the best course of action.