Many real estate investors are transitioning from Multifamily investments to commercial and NNN investments. Why are they doing this? Because they are tired of dealing with the day-to-day challenges of managing residential properties. This pace has accelerated over the last two years as residential tenants have been unable or unwilling to pay rent as a result of COVID and governments have instituted new landlord-tenant laws that make it more difficult to manage property and limit rent increases by instituting rent control laws.
While residential investments offer the ability to increase rents as expenses increase, properties with NNN leases shift the payment responsibilities to the tenants, reducing risk for the owner of the real estate. As Residential CAP Rates keep dropping, they tend to be in line with NNN leased properties.
Of course, it’s not as simple as it sounds. With this article, we hope to create a primer that will help investors make the decision of selling residential properties and shifting into other real estate investments.
What kind of lease formats exist in the commercial building marketplace?
There are a variety of income-producing properties available to trade into with different kinds of lease options available for commercial properties such as: gross, modified gross, double net, triple net, absolute NNN leases and ground leases.
Read the entire article HERE better understand the varieties.