Alike 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.