Sale-Leasebacks Are HOT with NNN Real Estate
Learn The Inside Scoop

Robert Newman’s History of Oil movie download

What is a sale-leaseback NNN sale?

A NNN sale-leaseback is a transaction whereby the owner of the properties sells the facility and agrees to sign a long term triple net lease usually somewhere between 10-25 years which goes into effect upon the closing of the transaction. The seller continues to operate the business from the location but now has gained more equity to run and expand the overall business.

A History of Violence release

The majority of single tenant NNN properties for sale are franchisee restaurants as well as other franchisee industries such as a Jiffy Lube. However, any business would qualify for a sale-leaseback. It is a common occurrence with large corporations that maintain office and industrial facilities to create sale-leaseback structures.

Pay close attention to marketing brochures, if you see the language similar to “new lease to be signed at the closing”, most likely it’s a sale-leaseback NNN for sale.

Why would an owner want to do an NNN sale-leaseback?

Being a real estate investor, you might ponder if the sale-leaseback is an indication that the owner is in economic trouble and consequently must sell his most important asset. It is a legitimate concern because a financially unstable lessee may not be capable of living up to their lease responsibilities and you’ll be left with a vacant building. Nevertheless, there are plenty of good motives as to why the business owner might want to sell his property and lease it back, which creates an NNN property opportunity for investors.

• Expansion of the business: Let’s say Bob is a Wendy’s franchisee operator who now has 8 locations, 4 of which were recently constructed and located on premier NNN real estate locations. Bob has a solid financial background and all of his locations have strong store sales and he wants to expand and built 5 more restaurants over the next 18 months. This requires significant capital but Bob doesn’t have 30% equity for each of these projects. So the perfect solution is to place some of his existing restaurants on the market to sell and sign a 20 year absolute triple net lease with the new owner. Investors are always looking for quality NNN properties for sale with solid financials and Bob will have no problem earning extra cash to build his 5 new locations. It’s very possible Bob could even make a nice profit and sell the NNN property for more than his construction costs.
  
• Reduce debt & clean up the balance sheets:
  wishmaster dvd

  Real estate owned by a company depreciates yearly, which means its book value on its balance sheet continues to decrease. By selling its real estate at higher market value, it can cash out all the built up equity. The funds thus can be used to lower the debt and to make the balance sheet more attractive or to broaden business used for research & development. This could also have a favorable effect on the stock value. When times get tough, some public corporations may sell off their real estate holdings to meet scheduled performance expected by its shareholders. Occasionally larger shareholders could order a company to sell its real estate holdings in order to make the corporation more profitable in a short term.
  

• Reduce income taxes: A large corporation may wish to create a Real Estate Investment Trust (REIT) owned by the same corporation, and perform a sale-lease back with a large group of outlets thus creating NNN properties.

The Nativity Story hd What should one look for in sale-leaseback NNN properties?

Apart from the NNN real estate location and varying other considerations, there are additional financial aspects you should evaluate when purchasing a sale-leaseback investment. A general

rule to follow is “the more risk you are exposed to, the higher the cap rate”. Below is a brief checklist with important items to research.

• Financial strength download testament movie : Study the past 3 years of the tenants income tax returns, business and personal financial statements if possible. Make sure you see an upward trend to ensure they are a stable tenant.
• NNN Lease Terms: The terms are always negotiable, so strive for the following:
  1. If the NNN property is a restaurant, accept no less than 15 years, however standard average is 20 years.
  2. It should be an ‘absolute’ triple net lease whereby the tenant pays for insurance, taxes, repairs and maintenance.
  3. Annual rent increases are a must and the majority of NNN properties over every 5 year period have 10% increases. Some have 2% annual escalations and others are flat for 5 years and then increase 10% after 5 years. These are bare minimums keep in mind, and paramount for increased value.
  4. Don’t accept an above market rent, otherwise if the tenant ever moves out you will loose money when you re-lease your NNN property at a lower price per square foot.
• Track record of the Tenant army of lovers gods of earth and heaven : Find out how many years they have been operating their business and the number of stores they operate. Business experience is also very important. What did they do before owning their own chain, for example… were they managers at other successful similar companies?
  
• Strength of the NNN lease guaranty: Don’t be fooled with single entity LLC structures that guarantee the lease. They have little value. Broken Flowers psp Single tenant NNN properties have most of their value in the guarantor of the lease. If the guarantor does not hold major assets or the properties are not investment grade, you should be very cautious.
  
• Financing: Even if you receive what looks to be a good deal on your NNN real estate property, you have to make sure the financing is feasible with reasonable rates. If the banks are not comfortable with the credit of the guarantor, they will raise the interest rate which will diminish your return.

  The Celestine Prophecy release

  Even if you pay all cash, keep in mind that the next buyer will mostly likely require a loan. If they can’t get good financing, their return will be lower and therefore the value of NNN leased property decreases.

Final piece of advice

• Employ a competent CPA to evaluate the tenant financials
  • The Robe movie download

  :

  Fraternity House ipod

  buy In Old Oklahoma Don’t rely on your own background to review the financial information, as it can be complex. Good accountants purposely prepare tax returns for the IRS that show a reduced taxable income for the sole purpose of reducing their clients’ taxes. A qualified CPA will be able to give you a proper understanding of the financial well-being of the tenant.
  

• Run Background checks: Before entering any business relationship it’s prudent advice to run background checks before solidifying a relationship. The same goes for checking your tenant. You can spend around $50 and get full reports, including the criminal history for anyone. If you can afford to invest $100,000’s in sale-leaseback NNN properties, you can afford the extra $50!

If you are in the market for NNN Real Estate, click on the “Browse Properties” below.