Are you tired of conventional ways of investing like CDs, bonds, or stocks? You may want to consider a net lease investment in a commercial real estate property. Here are some basics to consider.
What is a net lease investment?
Net leases are agreements between landlords and tenants where the tenant agrees to pay regular rent payments and cover additional costs that come with the property, such as property taxes, building insurance and maintenance fees.
Is it worth the risk?
Absolute net lease investments have varying risks and rewards but will typically generate between 4.5 to 8 percent annual interest, many with no landlord responsibilities.
Who benefits from net lease investments?
Real estate investors who have recently sold an investment property may want to avoid capital gains tax by reinvesting in a net lease investment. This would involve a 1031 exchange program where the proceeds from the sale of the property would be reinvested into another property thereby avoiding capital gains tax.
Landlords can benefit from net lease investments because it provides a steady source of income during fluctuations in the economy. In many net lease investments, landlords do not have to pay real estate taxes or cover maintenance costs.
The net lease investment can also benefit tenants, because landlords may be willing to offer lower rent payments to compensate for the additional costs the tenant is paying. Tenants who keep the property well-maintained may find that their insurance payments and maintenance fees are very low.
McGrew Commercial is experienced in representing buyers of absolute net lease properties.
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McGrew Commercial recently sold an absolute net lease investment in St. Francis, Kansas. The sale was a Dollar General Store with a 15-year corporate guarantee and a 7.5 percent cap rate. If you would like more information to determine if net lease investments are right for you, contact Doug Brown at 785-766-9355 or dougbrown@askmcgrew.com for more information.