With the state of the economy, is a NNN lease still considered a safe investment?

Recently all the news is about the commercial meltdown coming next. The tenants are bailing, leases are rising, etc. If one were to invest in a NNN lease property which property type would be considered he safest/most stable?
In Buying Property - Asked by Scott F. - Jul 30, 2009
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Davide P.
Pinole, CA

I think most people will tell you no investment is 100% safe. However, I think it highly depends on the tenant. If it's a company with a high credit rating and you don't hear them on the news mentioning "liquidation" or "consolidation" then at least you're on the right tract so far.

Jul 31, 2009
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Paul S.
Glendora, CA

A lot depends on the perceived strength of the tenant. A strong tenant will produce a lower cap rate because the risk of failure is low and therefore so is the return. Walgreens has been at the bottom of the risk spectrum and up until recently has commanded a 6.5% cap (lower the cap the higher the price relative to the income). Most of their leases are flat for 25 years (again a reflection of their perceived strength). A strong Taco Bell backed by Tacala would have a different cap (higher) and different in different states. The cap would be lower on one of Tacala's than on one that has a weaker franchisee. The key is to determine your level of risk taking and match that to the strongest tenant that gives you your desired return. There are many ins and outs I would be happy to discuss with you that would take pages and pages here. 800 554-7362 ext. 208 or email me at pstoski@yahoo.com
Paul Sylvester, CCIM

Jul 31, 2009
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Chris S.
Coeur D'alene, ID

No investment is 100% safe. Having said that we are seeing a return to investment in the credit worthiness of the tenant along side all of the typical desirable attributes of commercial real estate (like location, parking, access, age, sise, etc).
I'd say looking at a NNN investment, single tenant, with a long lease in place to a credit tenant is reasonably safe. However, recently many of those top notch credit tenants are going back to their landlords asking for rent reductions or else? I believe Starbucks did exactly that with ALL of their locations.

Aug 3, 2009
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Gregory G.
San Francisco, CA

Yes, the safest. Many corporations will continue to pay rent even if the location shuts down. Your investment is as safe as the company leasing it.

Aug 13, 2009
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