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What Are The Essentials of Financing NNN Investment Properties?

Securing financing for NNN (Triple Net) properties typically involves working with federally insured banks or credit unions, as well as private lenders. Optimal loan options are often provided by federally insured institutions, offering competitive rates and favorable terms. NNN loans are backed by properties occupied by a single tenant with a strong credit rating, such as Walgreens or CVS, or tenants with acceptable financial standings. Properties with national tenants are generally easier to finance compared to local shopping centers. Many lenders prefer single tenant properties like CVS, Walgreens, Dollar General, Family Dollar, and Dollar Tree, offering better rates and terms for investors interested in retail.

Investors in NNN triple net lease properties can anticipate interest rates as low as 3%, with terms including:

  • Loans for single tenants up to 75% loan-to-value (LTV)
  • Absence of upfront application or processing fees
  • Streamlined application process
  • Terms and amortizations extending up to 30 years
  • Options for purchase, refinance, and cash-out
  • 24-hour written pre-approvals at no cost or obligation
  • Minimal stepdown prepayment penalties
  • Non-recourse and partial-recourse options
  • Fixed-rate loans matching existing lease terms
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Private lenders typically offer pricier alternatives. However, for investors facing time constraints or seeking temporary financing solutions, private bridge loans can buy time to negotiate long-term leases while exploring better financing options from crowd-sourcing, credit unions, hedge funds, or insurance companies.

Acquiring a net lease triple net NNN real estate investment property entails specific financial prerequisites. Investors must have a minimum accredited net worth of $1 million, excluding income up to $200,000 (or $300,000 for joint filers) and the value of the primary residence.

During current economic conditions, securing financing for solid triple net lease investment properties can be challenging for small private investors. Nonetheless, alternative avenues, such as REITs, may offer opportunities for smaller investors to finance NNN triple net properties in preparation for exit.

Irrespective of the financier chosen, the tenant(s)’ credit rating significantly influences lease terms and interest rates for triple net lease investors. Lenders prioritize tenants with strong credit ratings, understanding that investor debt service relies on tenant rent and fees. Investing in properties with reputable NNN tenants is essential to mitigate risk.

Regardless of the stage in the NNN investment process, investors can rely on the expertise of NNN 1031 Pros. Led by Michael John, the team of NNN advisors boasts a distinguished track record in navigating complex transactions across various market cycles, providing solutions and identifying value for investors. NNN 1031 Pros offers NNN properties available in Gainesville, FL, San Antonio, TX, Cleveland, OH, and Tampa, FL.
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