Benefits of Owning a Single Tenant Net Leased Property

Written by Posted On Monday, 19 August 2019 07:49

When it comes to investing in real estate, there are many different property options to choose from. But one common option in commercial real estate is the single tenant net lease (STNL) property. This type of property is leased to just one tenant under a net lease and can offer several benefits for investors. But what is so great about STNL properties compared to other property options?

Reap a reliable and steady cash flow

As an investor, predictable cash flow is highly desirable. Fortunately, STNL properties offer both predictable and stable cash flow. Leases for this type of property generally span several years, which means investors spend much less time worrying about finding new tenants. Having this predictable cash flow for the foreseeable future can give property owners peace of mind. And this is quite appealing compared to other investment property types which may offer shorter leases or additional expenses. Furthermore, tenant turnover is less of a worry with longer leases as well as fewer changes in rent rates depending on the market.

Initial price point to acquire property is lower

Securing the right property is a big obstacle many investors face. Fortunately, getting an STNL property is not as difficult as it sounds: the price for single tenant lease properties can be reasonable, allowing investors with a smaller amount of equity to get their hands on a great investment property. And once a property has been obtained, large STNL properties are often traded and can allow investors to change their properties or get into a better financial situation if desired. Purchasing a single tenant net lease property from a reputable seller, like Capital Net Lease, can be highly rewarding and manageable with the right resources.

Have few responsibilities as management

It’s no secret that owning and managing a property comes with several responsibilities. But this is often not the case with STNL properties — aside from ensuring rent is paid every month, STNL property landlords may not have many other responsibilities. Tenants who rent these properties are generally responsible for operating expenses and other upkeep, not the landlord. Property owners can have tax bills and other expenses sent directly to the tenant, which makes for less work. Additionally, business owners who rent these properties tend to focus on keeping the property in good condition for the reputation of their business, so the landlord doesn’t have much to worry about that either.

Find reputable and financially secure tenants

Tenants who rent single tenant net lease properties tend to be businesses and could even be well-known, brand-name companies. In this case, landlords have the ease of knowing whether or not the company is in good financial standings, because that’s often public record. This is much easier than handling local tenants, where checking credit reports and employment status can be quite a hassle. When renting to a large or well-off company, property owners don’t have to worry as much about receiving payments on time and having that security is beneficial. Furthermore, the loans for these types of investments can be more appealing — the tenant’s credit vouches for the investment, meaning there are usually more options regarding financing compared to other property types. All in all, single tenant net lease properties have plenty of benefits to offer interested investors. From few responsibilities as property owner to reliable income for several years at a time, investing in an STNL property can be a great option, especially at a low entry price point. So if you’re an investor and have been considering some bigger property options, consider a single tenant net lease property to give you a high pay out with minimal responsibilities and peace of mind for years to come.

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Harris Johnston

Real estate investor with ownership stakes in commercial and residential projects in New York City, Philadelphia, Miami, Denver, and Laguna Niguel.

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