Who can invest in Net Lease Investments?
A Net leased property can attract a wide variety of buyers, they can be high net worth individuals to partnerships to large institutional investors like real estate investment trusts, life insurance companies and pension funds. 1031 Exchange buyers are attracted to net lease investments as well. So, what are the benefits of investing into a net lease investment?
Because a single-tenant, net-leased properties are bond-like investments they provide a more stable and predictable return. The existing tenants are committed to long-term leases, there’s very little re-leasing risk. Also single-tenant, net-leased investments can be fine tuned to an investor’s risk-reward expectations by choosing tenants with varied credit profiles. As an example ,some tenants are rated by national credit ratings agencies while other tenants have only their previous financial performance that show their creditworthiness.
Valuations of Net Lease Investments
As a comparison, traditional real estate investments are valued by the real estate itself. A single-tenant, net-leased property’s value is determined by a combination of factors which would include the tenant’s credit, how much term is left on the lease as well as rental escalations over the term. Also don’t forget the value real estate which tends to be in good locations depending on the type of credit tenant occupancy. The investor does not have to be concerned as much with fluctuations in the market because a single-tenant, net-leased property will maintain its value because of its bond-like, long-term lease and the credit tenant guaranty for the lease.
Best Time to invest in a Net Lease Investment?
A Net Lease Investment is a good investment in both good and bad economic times and in moving real estate markets. Why? a single-tenant net lease is guaranteed by a long-term lease at set leasing rates. As the owner and investor you will know exactly who will be the tenant in your building, how long the lease term is and exactly how much rent they will pay you. Stability provides will derive a steady income from your investment, regardless of how the economy or real estate market is performing.