If you?re like many Americans, you?ve not been able to save as much money as you?d like. If people have been saving regularly since age 25, they?re usually in good shape by retirement. But if you don?t start until age 45, you?d need to save at a rate three times higher in order to have enough. This is especially a concern for women, who only make 76% of what men typically do in the workplace.
Another issue is debt. Ideally, most people will have paid off their debt by the time they reach 75, but 21% of Americans still have mortgage debt by that age. And to add to the problem, a lot of people aren?t talking about investments and savings with their kids, hamstringing the next generation. Studies show that 61% of parents would talk to their financial advisors about investments, but not their children.
If you?ve found yourself getting on in age, but still carrying debt or without the savings you need, investing in a property for commercial leasing can be one type of useful investment that might help to secure your future as you collect commercial rent. As a first step, understand some of the commercial lease types.
Understanding Gross Commercial Leasing
Simply put, with a gross lease the tenant pays one lump sum to the landlord, who then covers property taxes, maintenance fees, insurance costs, utilities, and all other costs. The tenant simply pays once a month and is done. This sort of lease is very popular with malls or other structures with multiple tenants, as it guarantees a certain level of quality across all the shops. This sort of lease is not typically preferred by the part-time commercial investor, as it requires a lot of involvement on the part of the landlord.
Understanding Net Commercial Leasing
The net commercial lease comes in several types, but the most common by far are triple net properties. This type may also be called NNN deals or and NNN lease, where the Ns stand for ?net, net, net.? NNN investments are most popular with part-time investors, since in this type of commercial leasing the tenant is responsible for everything. A basic rental fee is paid to the landlord, and the tenant then takes care of all taxes, insurance, maintenance and utility fees, janitorial service, etc. NNN deals basically allow the landlord to collect money while not having to expend a great deal of effort in the property.
Are There Downsides to a Triple Net Investment?
While it is alluring to consider getting regular rent payments for a property that doesn?t require much personal interaction, there is no such thing as a completely risk-free investment anywhere. There are a few things to consider. Naturally, the rental returns will be lower, since you are paying for the convenience of having no management duties. It is also utterly crucial to choose the right tenant, since the costs in depreciation can be crippling should the wrong tenant fail to care of their responsibilities.
When considering NNN investments, it?s also necessary to carefully consider the future, as property values decline and rise over time depending on location. One must have a very thorough understanding of the market and the neighborhood. It?s also crucial to decide what type of tenant to rent to, since some tenants, such as fast food restaurants and oil change stations, can modify the property so that it is nearly impossible to rent to anyone else.
Any kind of investment needs to be entered in to with caution and open eyes. The best thing to do is to contact a commercial real estate broker or advisor and carefully talk over the options, realities, responsibilities, and rewards. When done right, commercial real estate investment can be a great way of maximizing assets for the future.
