NNN Risk Balance
NNN assets hold the best balance of Risk vs. Yield. NNN Single Tenant Net Lease (STNL) needs minimal management; the corporate is responsible for all operating expenses, and the real estate owners receive a rent check in the mail, which creates a very high level of passive income for the investor. This form of investment is very attractive to all major lenders including life insurance companies, banks, and private equity firms.
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NNN leases are typically backed by investment-grade companies graded by Moody, Fitch, and S&P. The investment-grade status reflects the lender's appetite for these properties. The return on investment is relatively low compared to high-risk high-yield assets such as multifamily and other NNN assets that are not backed up by strong credit corporations such as franchisees.
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Needless to say that high-risk high-yield properties such as the residential income-producing assets (houses and apartments) will always be at a higher risk because of the high exposure rate to losses i.e. bad management, high rate tenant turnover, and increasing landlord liability legislation (rent increase caps, rent control, and rent stabilization).
NNN Risk Balance
NNN assets hold the best balance of Risk vs. Yield. NNN Single Tenant Net Lease (STNL) needs minimal management; the corporate is responsible for all operating expenses, and the real estate owners receive a rent check in the mail, which creates a very high level of passive income for the investor. This form of investment is very attractive to all major lenders including life insurance companies, banks, and private equity firms.
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NNN leases are typically backed by investment-grade companies graded by Moody, Fitch, and S&P. The investment-grade status reflects the lender's appetite for these properties. The return on investment is relatively low compared to high-risk high-yield assets such as multifamily and other NNN assets that are not backed up by strong credit corporations such as franchisees.
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Needless to say that high-risk high-yield properties such as the residential income-producing assets (houses and apartments) will always be at a higher risk because of the high exposure rate to losses i.e. bad management, high rate tenant turnover, and increasing landlord liability legislation (rent increase caps, rent control, and rent stabilization).
NNN Corporate Lease - Lowest Risk
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high credit rated tenants
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lenders high appetite to invest
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no landlord responsibilities
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stable tenets with backed up reserves
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lower yields
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100% passive income throughout the lease
NN Corporate Lease - Moderate Risk
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mid to high credit rated tenants
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lenders high appetite to invest
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some landlord responsibilities
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stable tenets with backed up reserves
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higher yields
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70% passive income throughout the lease
NNN & NN Franchisees - Highest Risk
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low to non credit rated tenant
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lenders lower appetite to invest
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non or some landlord responsibilities
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stable tenets but no guarantees on reserves
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highest yields
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70 to 100% passive income throughout the lease