NNN properties

Since there are no landlord responsibilities in NNN long term investments with corp. backed tenants, does it make sense to restrict yourself to your local market? Are there any advantages to that versus searching country wide? And if so is it really enough to justify severely limiting your pool of potential properties? Also, how would one look for a broker that would search all over since brokers are limited to the sates they’re licensed in?
In Buying Property - Asked by Alexander K. - Aug 4, 2011
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Answer(s)

David M.
Broker/Agent
Carpinteria, CA

Knowledge of a market is the key to buying any NNN property. When you buy it is not only the strength of the Tenant, but it is also location in the marketplace, potential reuse of the building, growth or no growth in a market, term left on the lease, etc. It's more comfortable for people to buy in their local market, because it is easier for them to get to understand theri local market. However, if you know the right questions to ask about any property you can get comfortable buying anywhere. A broker can be of great assistance to you in purchasing a property anywhere you want to invest. He does this through being a part of a network of brokers nationally and internationally who assist each other and share fees. As it is hard to answer your questions in a short forum, if you need additional information on buying commercial real estate and review a discussion on NNN Properties please visit my website at www.commercial-real-estate-information.com. Thanks, David Morgan

Aug 4, 2011
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Chris F.
Broker/Agent
Salem, OR

All these questions depend on a few key questions you need to ask yourself (if you are the investor) or your client. First, what is the investment strategy? Meaning, what exactly am I looking to accomplish from NNN real estate investing? This helps drive the next question, what are the 3-5 most important things to this strategy for me? (ie, internal rate of return, cash on cash return, lease terms, location, position, tenant strength, rent growth, long term potential re-use . . . etc, and there are any number of other each investor might have. It is important to remember that you can't have them all, which are the most important?). From there you need to know what risks you precieve in the market, what about an investment worries you the most? Is is re-tenanting the space, having it close by, is it making sure rents are comparable to market today . . . etc. Once you have lined up all of those points, now ask yourself, "In looking at this investment model, does it have to be in-state?" If my most important things are return, lease terms, and tenant strength, why limit yourself to your state? I always try and help my investors who look nationally that are comparing in-state to national investments that you can't expect to have it all. Often you will sacrifice something (close by location) for something else (greater return, longer lease terms). And the reason is nothing more than shear numbers due to limiting yourself to a single market. It also depends on the size of the investor, and other properties owned.
State licensing laws vary from state to state. I for instance will only help sellers of Investment property in Oregon (all over the state) because I am licensed here, however, I will help investors from all over the country buy property all over the country. Typically if there is a licensing problem with helping a buyer we are always more than happy to co-broker a deal to help facilitate transactions if needed.

Aug 5, 2011
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Chris S.
Broker/Agent
Coeur D'alene, ID

We regularly conduct searches on a national level for single tenant NNN deals. However, I still think there is value to somewhat limiting your ownership to a particalur region of the country. Even though you have corporate signatures, you still want to have a reasonable feel for the building, the market, the neighborhood, etc. ... and even if the lease is 100% absolute NNN, it still makes sense to have a qualified local proeprty manger keep a watchful eye. Our management side handles a significant number of proeprties like this and the inexpensive fee is well worth it (and often covered by the tenant anyway).

Aug 1, 2012
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