Investing in real estate has never been easier. There’s a wide variety of properties to invest in, and some are quite lucrative. However, the financial market is quite volatile, and you must seek stable investments before putting in your cash. Nowadays, most investors choose triple net lease properties- and for a good reason. You can go for single-tenant properties, but multi-tenant investments are worth considering.
What are multi-tenant net lease properties?
These are properties with more than one tenant. It’s a rental agreement between the property owner and several occupants. All tenants have a role in maintaining and paying up the property costs on top of the agreed amount of rent. Unlike in single-tenant NNN properties, you have a higher rental income and more tenants to cover the rental income in case of vacancies.
Why choose multi-tenant NNN properties?
- Higher income levels
You’ll generate more income with multiple nnn investments. The trick lies in tenant selection, though! With the right tenants, you’ll enjoy higher yields than with a single-tenant property. Also, you can be sure of income even when having vacant units.
- Lower vacancy rate
With single-tenant investments, your property can remain vacant for a long time. You’ll then be forced to cater to the maintenance, repairs, insurance, and any other costs before getting a new tenant. This is quite costly, and you’ll have to dig deeper into your pockets.
But, this isn’t the case with multi-rental properties. Although you may have some vacancies, you can’t have a total vacancy rate. And this means that you’ll always have some income to cater to the expenses of the vacant units.
- Shorter lease periods
The average lease period for multi-tenant net properties is seven years for commercial and one year for multi-family units. This leaves you room for adjustments and an opportunity to raise rent rates when necessary. Also, investors choose to close on various units at once. This is more efficient and economical and minimizes transactional closing fees.
- Investable anywhere
With NNN investments, you have minimal responsibility, and the tenant caters to almost all the associated costs. This makes it easier to invest anywhere since you won’t have to be unavailable all the time. Unlike other properties, you won’t have to deal with tenant calls to undertake repairs and other types of maintenance on your property. You can choose to invest in attractive locations and attract brand-name tenants, thus better guaranties.
- Easy to find tenants
It’s easy to get tenants for multi-tenant NNN properties, particularly for small units. Also, you don’t have to find a tenant in the same business line as in single-tenant investments. For instance, single-tenant properties have a particular purpose. These can be banks and restaurants, and you can’t change this to residential units.
The bottom line
Both single and multi-tenant investments are good choices. But, all have their pros and cons. It’s best to research thoroughly before investing; this minimizes risk and ensures a steady income flow from your investment. With multi-tenant properties, you’ll enjoy higher income levels and have more tenants to cater to the expenses. However, you may need to hire a property manager when dealing with several tenants or units.