Risks of Investing in Single Tenant Net Lease Properties

Risks of Investing in Single Tenant Net Lease PropertiesAlike other commercial real estates, single tenant net lease properties are subject to proper scrutiny. We have discussed a lot about the benefits of net lease properties, but what’s on the other side of the coin?

Bad Location

When looking for single tenant net lease properties, search for a location in the metropolitan area, where the demand is usually high. Even large companies find it hard to make profit when they invest in smaller towns. If you have managed a slot in a large metropolitan area, make sure your lot doesn’t fall in a marginal locality.

You may contact the city development office to find out about any prospective unpleasant zoning changes beforehand. Take all the time you need and talk to people living in those areas to know whether the businesses there are really booming, or it’s just the one part of the whole scenario.

Specialized Buildings

Do not fall for a big name right away when it comes to selecting a tenant. A high-profile tenant may also need extensive renovation to fulfill their requirements. If a tenant doesn’t extend the length of the lease, it might be hard for you to find a new tenant who will adjust just fine in the place.

Blend the money and time you require to renovate the property with the average time required to find a tenant and close on a new lease and you may end up incurring heavy losses.

Don’t Be Fooled By A Big Name Franchise

Do not always take for granted that leasing your property to a big franchise is going to be profitable for you. Not every parent company covers the lease payments. And most of the times, franchise owners simply work as subsidiaries. Moreover, when they set up a LLC, the parent company doesn’t need to honor their lease anymore.

About the Author

Dwaine L. Clarke is the Founder and President of GCT Net Lease. GCT Net Lease is an investment real estate services firm exclusively focusing on Single and Mult-Tenant Net Lease Properties. The firm provides a full range of brokerage and advisory services nationwide to High Net worth Investors, Developers, REITs and Institutional Investment Funds. GCT Net Lease is headquartered in Windsor Connecticut. Dwaine is also a nationally recognized speaker and consultant. He is also the author of three best selling commercial real estate investing books. Mr. Clarke’s experience branches through close to over a decade of working with and for some of the nation’s top investors to purchase, underwrite, develop and manage millions of dollars in commercial investment real estate. For his case, he has not only assisted these investors, but also became a student of theirs. Through careful analysis he started to understand what these investment experts were doing, using top strategies to buy, manage and sell their investment properties for maximum profit. He especially took note of how these investors were leveraging their time and how they made their decisions without interfering with their personal or business lives. Mr. Clarke is also active in investing and creating real estate partnerships, providing a vehicle for high net-worth individuals to own income producing real estate.

Comments are closed.