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Triple Net Lease Property of the Week

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This week’s selection of Property of the Week goes to Bridgeport Ranger Station in Bridgeport, California

Definitely a unique Triple Net proposition, this facility consists of a Ranger Station located on 3 acres within the Toiyabe National Forest.

The tenant is the US Government.

It offers a rate of return of 6.33%.

And checking up on your property should be a vacation in and of itself.

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Home prices increased 6.7% in July

According to Core Logic, home prices increased 6.7% nationally in July of 2017 when compared to July of 2016. This compares to a rate of 7.7% for Santa Cruz County where the average price is now $815,000.
Core Logic sees a market of continuing strong demand for homes coupled with a lack of willing sellers that continues to result in an inadequate supply to meet demand which is pushing prices up. One other factor in the equation is continued low interest rates, which have returned to levels last seen in the Fall of 2016.
Rates for 30 year conforming ($424,000 or less) loans averaged 4.11%.
Core Logic predicts that this combination of strong demand and low inventory coupled with low finance rates, will continue to drive prices higher through the rest of this year.
The underlying cause for ...

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Triple Net Lease Property of the week 8.22.17

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This week’s selection is one of the few Triple Net Lease properties I have seen for under $1,000,000, that appears to be a good value in most respects.

Pros:

Price                  $590,000
Use:                    Coffee House
Location:         Between high school campus and outlet mall
Age:                    10 years
Increases        The lease calls for a 10% increase every 5 years.

Cons:

Lease Term     5 years with 3 5-year options
Cost / Sq Ft     $1,365

Summary: The price point represents a good entry level for these properties, and yet it is a relatively new building which should not require expensive renovations or repairs in the near future...

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Triple Net Property of the Week

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There are many factors to consider in buying a Triple Net property.

Perhaps the most important is:
Strength of Tenant

Because if the tenant cannot pay the rent for any reason, there will likely be an interruption in the investor’s cash flow. Is the tenants product or service likely to remain relevant? Starbucks has become a fixture in our society and appears to be in no danger of vanishing. Is the tenant financially stable?
Starbucks (SBUX) is the tenant, and they enjoy a credit rating of A-.

Market Area

Is it growing or in decline?
This is a new building in a growing community.

The Lease

How long does it have to run?
Does it have escalation clauses to protect against inflation?

Average Income

Can the populace afford to buy the product or service?

The Building itself

While the tenant is...

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Triple Net (NNN) Lease Property: BENEFITS

For investors

Investors can benefit from NNN lease properties in a variety of ways. In NNN leases tenants take on the responsibility of major expenses such as HVAC and roof repairs keeping the operation cost lower for the landlord. Typically, NNN leases have lower rent per square foot rates which increases the tenant pool when a landlord is ready to lease the property. For specific tenants, landlords will frequently modify leases allowing for greater flexibility and higher tenant retention.

Absolute net lease
Most investors in today’s net lease market prefer an investment that is truly passive, therefore, an absolute net lease is a requirement for many of these investors...

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Variations of the NNN lease

Single-tenant net lease

NNN leased investments are generally leased to one single tenant and are thus referred to as STNLs or Single Tenant Net Leases. A NNN lease investment can however have two or more tenants, though it would not be considered an STNL investment. An example of this would be a Starbucks & MetroPCS which share a building under two separate NNN leases, or a retail strip center where all tenants are wrapped into one NNN lease. Both examples would be considered NNN leased investments; however they would not be STNLs. The risk of default is spread out over more than one tenant in such NNN deals (i.e. If either Starbucks or Metro PCS goes bankrupt, the other tenant continues to pay the rent due under their NNN lease). Such deals can appeal to investors seeking to spread ...

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What is a Triple Net (NNN) Lease Property?

Net lease” is a term used for an arrangement in which the tenant or lessee is responsible for paying, in addition to base rent, some or all of the expenses related to real-estate ownership. These expenses, often called the “three nets”, are property taxesinsurance, and maintenance.[1] Because the rent collected under a net lease is net of expenses, it tends to be lower than rent charged under a gross lease. Net lease types include single netdouble net, and triple net leases, with the term “net lease” often being used as a shorthand expression for any of these arrangements. A triple net lease (i.e., one that is net of all three of the major expense categories) is often abbreviated as “NNN lease“, but is still pronounced as “triple net lease”.

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Interest Rate vs. APR: Know the Difference

In real estate, you will see these two terms come into play when it pertains to mortgages. Mortgages can have many different aspects to them, whether it be how they are set up or what the different fees are.

What Is the Interest Rate?

Your mortgage interest rate, according to consumerfinance.gov, is the cost you are paying each year to borrow money for your mortgage. In other words, this is the fee that you pay throughout your mortgage to have the financial institution loan you money.

What Is APR?

The APR is the annual percentage rate. It is like the interest rate but includes more fees. Because of this, you will most likely notice that the APR is typically higher than the interest rate...

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