I
Investment Structures
​
Four investment structures are common in the Triple Net asset type: The Individual Investor, Private Equity Firms, REITs, Joint Ventures, and Syndicates. Each investment structure carries pros and cons, and it is for the individual investor to decide based on his/her personality, which is the right way for them to invest. From our experience, this is one of the first questions that we, as advisors, always ask. To match the investor with the best investment, we tend to learn the investor's personal preferences by initially performing a discovery process.
​
The Individual Investor: Individuals with relatively high net income like to invest in Net Lease assets as part of their portfolios because of the actual passive income of NNN's. Among these are very busy professionals like doctors, lawyers, and CPAs who know the NNN assets' qualities and wish to avoid the volatility of high turnover types of other real estate investments. We have recently seen many other real estate investors migrating from different asset types, such as multifamily and single tenant residential to NNN.
Another example for individuals holding portfolios of NNN are the individuals who believe in real estate, earn high and stable returns, but are active in the market with 1031 exchange, buying and selling on an annual basis and climbing up the tenant's credits and property locations.
​
The NNN investor is mostly looking at the national level where cap rates fit their investment criteria, the lenders' appetite for specific tenant's credit rating, or geographical areas where lenders are looking to invest. Thus, the NNN investor's natural partnership with lenders and/or with other entities is essential for the NNN investment model's success and has been proven in the past decades as a very successful and sought after asset type.
​
​
Private Equity Firms are an investment class that consists of capital not listed and not available on public exchange markets. Private equity is composed of funds and investors that directly invest in private enterprises or that engage in buyouts of public companies, resulting in the delisting of public investment. Private Equity Firms, as well as Family Offices, tend to invest in NNN assets to add a stable element to their portfolios.
REITs are real estate investment trust companies that own, operate, or finance income-generating real estate. Modeled after mutual funds, REITs pool the capital of numerous investors. This model makes it possible for individual investors to earn dividends (rather than ownership) from real estate investments without buying, managing, or finance any properties themselves. Many taxation rules are governing the operations of REITs. The company may dedicate itself to a specific asset type or diversify its acquisition and holding criteria. Still, the investor is passive throughout the entire time and has no access to the decision making process.
Joint Ventures: a joint venture (JV) is a business arrangement in which two or more parties agree to pool their resources to accomplish a specific task. In NNN's acquisitions, the JV could be the only way for investors to pull money together and climb to higher-yielding assets or move from residential investments to the commercial world. Several forms of incorporation may suit the specific needs of partners like LLCs or LLPs, and so on.