john skinner real estate agent and investment consultant watsonville, capitola, aptos, santa cruz

Home Prices in the Golden State

CALIFORNIA

California has experienced 5 years of rising home prices, and that trend is expected to continue for another 3 years. If prices rise the 4.2% projected for next year, the average price of a home in California will reach $561,020 and surpass the record set in 2007 or $560,270.

However, even at this level, prices will remain below pre-recession levels when adjusted for inflation.

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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%.

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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.

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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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