Investing in a property with a triple net lease is one of the most common investment tools for professional investors. The biggest reason is it becomes the safest source of passive income for a predefined time.
So far, this is the half-truth that most people are aware of. Then what is the rest of the story? Let's find out!
A triple net lease is a fortunate investment for both commoners and real estate investors. Regardless of the age and experience in the real estate industry, one can reap the benefits of a triple net property at its best. All you need is to remain concerned about a few factors, and you are all set to enjoy its perks for a long time.
Here is a string of what to consider when making your move for a triple net lease property for real.
Check the creditworthiness of the approaching tenant - No matter how lucrative deals you receive, ensure to check the tenant's creditworthiness thoroughly before fixing the deal. Plus, don't forget the sole purpose of investing in a triple net property. It is to reap long-term profits in the form of rent payments. Therefore, find out if the tenant is eligible enough to pay monthly EMIs constantly or not. Here, you may need to analyze the financial status and history of the tenant, revealing a lot about it.
Generally, most publicly traded organizations prove to be a creditworthy tenant as compared to a private entity. Nevertheless, the publicly traded companies still sound suspicious on the ground of market conditions. It is uncommon for a publicly traded company to look for a Triple net property for sale and then close its multiple locations during tough times. Such circumstances aren't just difficult for the business but for the real estate property lender too. Therefore, it becomes essential to evaluate the creditworthiness of the tenant through bank history and other sources.
Read the terms of the agreement carefully - If you are buying a triple net property for real after a long wait, you deserve to properly read the terms and conditions. One of the most prominent illustrations is that if the lease agreement is for fewer years than your prediction, it will leave an impact on your passive income plans too. Short-term contracts lead to the need to re-leasing the property on new terms. This puts a question on the value of the property sold or purchased.
Engage a legal counselor - This is for security purposes as property conditions often lead to legal matters. Keep the counselor aware of all the terms and conditions of the agreement to remain on a safer side. Lack of knowledge without a legal counselor raises the chances of you getting trapped in a bad deal.
The final takeaway -
When investing in a property, everyone looks for a reliable property that gives easy returns with a handful of profits forever. This is where a triple net property proves to be of great value. All you need is to have ample knowledge about the right time to invest in it.