THE VALUE OF A LEASING BROKER IN TRIPLE NET LEASE INVESTMENT

Triple Net leases are real estate lease agreements where the tenant pays a defined portion of expenses beyond the rent to the landlord. For example, property taxes, insurance premiums, utilities, property maintenance, and repair costs. Net leases are commonly used in commercial lease agreements and are less common in residential leases.

A triple net lease, also known as a net-net-net or NNN lease, insulates the landlord of the obligation to cover all expenses mentioned above such as property taxes, insurance premiums, utilities, maintenance, and repair costs. The tenant is responsible for paying rent as well as all expenses. Most often, triple net leases are long-term (10 years or more) and they generally include provisions for rent increases.

A commercial real estate broker is a middleman between sellers and buyers of commercial real estate, who helps clients sell, lease, or purchase commercial real estate. A commercial real estate broker can work as an independent agent, an employer of commercial real estate agents, or as a member of a commercial real estate brokerage firm.

Values of a Leasing Broker in Triple Net Lease Investment

Given that a net-leased investment typically costs millions of dollars, finding a good triple-net broker is particularly important. Working with a good triple net broker will give you better access to inventory, better financing, and a better investment result. 

Here are 5 values for a top-line triple net lease broker;

• Fundamental Knowledge 

Many of the triple net broker firms in the market lack a solid understanding of the fundamentals of an NNN investment. Look for a triple net broker who knows the difference between a double net, a triple net, and a “true” triple net lease. Your triple net broker should also understand the credit rating system, as this will help them, and you, measure the risk of a given tenant.

• Access to Inventory 

A strong NNN broker will have a large and diverse inventory consisting of a mixture of their own listings as well as properties offered by other triple net broker companies and off-market deals. This will let you choose from a number of different properties to find the right mix of lease terms, lease length, and tenant quality.

• Access to Financing 

A good triple-net broker knows that the lender can make or break the deal. As such, you should look for a triple net broker who either has an in-house commercial mortgage broker or a strong relationship with an outside broker. Your triple net broker should also understand the many different financing options available, including bank financing, life insurance financing, conduit debt, and the “CTL” credit tenant lease programs that provide long-term fixed-rate debt for NNN assets.

• Client-Focused Business 

Your triple net broker should take some time to get to know you and your goals. They should then show you the appropriate property. If, for instance, you express a desire to have a long-term stable income and your triple net broker shows you properties with five or fewer years remaining on the lease, you may want to select someone else. Watch for a NNN broker who does not attempt to saddle you with more debt than you want. Although some debt carries a number of benefits, it also carries risks, and a good triple-net broker will help you strike the right balance.

• Experience 

Your triple net broker should have a few deals under his or her belt. Although some of the most active triple net broker teams in the company focus on seller representation, there are a large number of good buyer representatives who have amassed a large resume of experience. Work with a triple net broker like that, and if they have a well-respected designation, like CCIM, that is an additional plus.

 

As informed investors we should understand the risks associated with real estate investing and that there is no guarantee. Please do your due diligence.