The platform's proprietary software uses the Average Cap Rate of a particular tenant and a different range of lease terms remaining to calculate price and compare it with the proposed one
November 222nd, 2022: Net Lease World’s NNNEstimate has been described as the best tool for identifying profitable triple net lease deals both on and off the market. Regarded as the most user-friendly commercial real estate platform in the industry, the company's proprietary software takes the stress out of the usually cumbersome scouting process by using key parameters such as the average cap rate and remaining lease terms to determine prices and mark out amazing deals.
“The NNNEstimate calculates the Average Cap Rate of a particular tenant with a different range of lease terms remaining i.e. 0-4.9, 5-9.9, 10-14.9, 15-19.9 and 20-25. And on that basis of average cap rate and the property lease term, we calculate its price and compare it with the proposed one.”
Using the company's proprietary tool, real estate investors can easily find and bid on triple net properties for sale all over the country. A wide range of filters such as sector, tenant name, location, price, cap rate, income, or least term streamlines search results to ensure users find properties that match their preferences. With the NNNEstimate, investors can easily compare multiple tenants side by side to identify the best deals and make decisions informed by facts and figures.
Registered users of the Net Lease World platform also have the luxury of maintaining a favorite list where they can save properties they find when scouting for easy reference later. A “more information” button at the foot of every property description sends an automatic email request so users can get a detailed run down of properties that draw their interest. Once an investor is satisfied with the terms surrounding a particular property, he/she can simply click on "make an offer" button on each listed property to get a digital letter of intent which can be signed electronically from any smart device.
To the uninitiated, a net lease refers to a lease system that makes the tenant responsible for paying some, or all of the property expenses, that normally would be paid by the property owner. As they are required to handle other expenses which often include property taxes, insurance, maintenance, repair, operations, and utilities, tenants under a net lease agreement generally pay a lower base rent.
Generally, net lease agreements are grouped into 5 categories that accommodate all types of properties ranging from residential to office and industrial properties. In the Single Net Lease, tenants are required to pay the base rent and also handle the property taxes on behalf of the property owner. The Double Net Lease puts the burden of the property's insurance premium on the shoulders of the tenant, in addition to the base rent and property tax.
Considered to be the most extreme variation of a triple net lease, the “absolute triple net lease" or "true triple net lease," transfers every possible risk associated with the property and to the tenant, who is also responsible for rebuilding in the event of structural disasters, regardless of the adequacy of insurance proceeds. And at number 4 is the Ground Lease under which landowners give out their lands to tenants who will agree to build and continue to pay rent, in addition to handling all other expenses. After the agreed period, ownership of both the land and the property will revert to the landowner.
In recent years, triple net lease properties have become one of the most popular investment instruments for real estate investors with low-risk appetites. Compared to other investment instruments such as stocks and bonds, triple net lease properties provide more consistent cash flows. By transferring maintenance costs, property taxes, and insurance premiums to the tenants, property owners can keep the operating costs of their properties surprisingly low, while still enjoying steady income from the base rent.
“A triple net lease for sale presents the best opportunity for low-risk wealth preservation. They are a safe and reliable investment option that minimizes risks and ensures a guaranteed recurring income while providing more consistent cash flows when compared with other unstable options such as stocks and bonds.”
In practice, triple net lease agreements can be subdivided into two distinct sets. The first type, known as the Core group, involves low-risk long-term leases, reliable tenants, consistent cash flows, and periodic rent escalations. The other is usually high-risk and championed by sellers looking to divest their properties because of failing tenants.
Despite their incredible performance, net lease agreements can be tricky and require additional levels of scrutiny and due diligence. Net Lease World advises that extra caution be taken during evaluation to ensure investors only get into deals that are compatible with their budget, calendar, and risk tolerance.
"While net lease properties present a wonderful option for investors to enjoy stable cash flows as well as a relatively passive involvement in the day-to-day management of the properties; the stringent conditions and rigid timeline dictate that buyers spend time evaluating every aspect of the deal, to ensure it is compatible with their risk tolerance and time horizon."
To learn more about Net Lease World or to try out the NNNEstimate, please reach out to the company via the contact info below.
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Media Contact:
Net Lease World
Ted Dowding
