Use NNN Investment to close your 1031 Exchange
Anyone looking for management-free investment will find NNN lease lucrative. Real estate investors crave for investment structures that not only offer a regular flow of income but also guarantee freedom from day-to-day management responsibilities. Paying property expenses from the profit may not please any investor. Under a standard lease, the investor generally pays property expenses from the rent received on the property. Therefore, a part of their income goes in managing the property. However, a triple net or NNN lease removes the burden of paying property bills from the investor’s shoulders.
NNN investors enjoy management-free income
A NNN lease requires the tenant to pay all necessary property expenses, instead of the landlord, along with the base rent. The expenses the tenant pays in a NNN lease includes insurance fee, property taxes, and maintenance cost. In other words, NNN investors enjoy a regular flow of income without any liabilities. However, you may find variation in NNN leases depending upon what property expenses it covers. For example, an absolute NNN lease requires the tenant to pay all three property expenses – insurance fee, property taxes, and maintenance cost (together known as the three nets). That’s why it’s called a NNN (Net, Net, Net) lease.
On the other hand, a double-net or NN lease requires the tenant to pay any two property expenses along with the base rent. Here, the two property expenses include insurance fee and property taxes. Whereas, the investor is responsible for paying the maintenance cost of the property.
Another Net lease, known as the single net lease, requires the tenant to pay one property expense along with the base rent. Here, the tenant pays either the insurance fee or property taxes and the investor takes care of the other two expenses.
Which one should you choose?
NNN lease provides a big relief to investors by eliminating property expenses from their share of income. Consequently, NNN investors enjoy a free flow of cash without any deduction. On the other hand, a double or single net lease eases them to some extent by removing the burden of one or two expenses from their heads. From this, it can be said that no other lease agreement could be more beneficial for investors than a NNN lease.
1031 Exchange investors can use NNN investment to close their exchange –
As you may be aware, Section 1031 of IRC or 1031 Exchange allows investors to defer capital gains tax on exchanging an investment property for another like-kind property. As NNN properties are also used for business or investment purposes, it qualifies for a 1031 exchange. Over the years, many investors have used NNN investment for closing their 1031 exchange. In the process, they have deferred millions of dollars in taxes, which otherwise they would have to pay.
In order to learn different aspects of NNN and 1031 Exchange investment, you can call 888-993-2835 or email us at email@example.com