Pros & Cons

The Pros

1. Generate a much higher cash flow than with other property investments.

2. Tenants are responsible for all taxes, maintenance and insurance (some leases are NN which leave you with partial responsibility).

3. Lease payments are guarantead from major corporations.

4. NNN property can be located anywhere, because you are not managing or maintaining it.

5. Tenants take pride in the property because it effects their business. This is different than income units, where tenants often abuse the property.

6. Long term stable income (from 10-25 years depending on the lease).

7. Rent bumps from 5%-10% are built into most leases, with option periods to extend the initial period.

The Cons

1. Very little upside potential (with apartments you can improve the units and increase the rents which will automatically increase the value).

2. The value of the property can decrease when there are just a few years left because investors see risk. There are ways to deal with this. The best way is to renegotiate a lease before the end of the term.

3. If the tenant does not re-lease at the end of the term this leaves you with a vacancy until you find a new tenant. One way to deal with this is to sell before the end of the term. Or, if you have a good location national tenants will seek your property.

4. The tenant may not be able to endure a bad economy. That's why you only pick strong national tenants with a corporate guarantee, and review their financial statements

As you know there are risks with any real estate investment, however I believe you can minimize those risk if you have the right advice and choose strong tenants.

Contact The Jacobs Group

Bang Commercial Realty

The Jacobs Group NNN
Los Angeles, CA
Cell 310 920 8996
Office 310 378 7747
Fax 310 378 7747
The Jacobs Group NNN

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