In this episode, co-hosts Adam Carswell and Michael Flight are joined by special guest Jason Ricks, COO of Liberty Real Estate Fund LLC, to discuss the due diligence period and lease analysis for Triple Net real estate deals. They touch on the key components of what happens during the due diligence period of analyzing NNN property leases and stress the importance of visiting the physical Triple Net store location to assess the property investment’s chance of success. Jason also shares a list of 10 important factors to consider when evaluating a net lease, incuding renewal options, early termination clauses, radius resurgence and much more. They wrap up the episode by emphasizing two major factors to complete before the end of the due diligence period and why the lease analysis is essential to NNN real estate deals.
Michael and Adam would like to give a huge thanks to Jason for coming on the show and sharing his knowledge and experience with the Nothing But Net community.
Contact Jason Ricks: hello@libertyfund.io
Timestamped Shownotes:
01:48 – Host Adam Carswell and co-host Michael Flight, CEO and co-founder of Liberty Real Estate LLC (Liberty), introduce special guest Jason Ricks, COO of Liberty Real Estate Fund
04:23 – What does Jason Ricks do as the COO of Liberty?
05:40 – What is the due diligence period and what happens during it?
06:13 – What information should be reviewed during the lease analysis of a Triple Net (NNN) lease property?
09:30 – What important factors should buyers of Single Tenant Net Lease (STNL) and NNN properties note about the exterior of the properties?
10:16 – Why is the brand awareness and visibility of a Single Tenant Triple Net Lease property crucial for its success?
11:04 – What maintenance factors are important in assessing the physical property of a Triple Net lease investment?
11:27 – How does a tenant’s maintenance and management of an NNN property affect its overall success for investors?
13:34 – How do reciprocal ease agreements benefit investors’ Triple Net properties?
14:05 – Why are anchor tenants crucial for driving business to the STNL investment properties?
15:07 – Why should investors make sure to get a Phase 1 Environmental Inspection, also called Environmental Site Assessment (ESA)?
17:33 – Why is it important for a Triple Net property to have stocked shelves when checking on the physical store?
18:24 – What is the most important aspect of a Triple Net lease property?
19:01 – Why is understanding the the type of lease key for a Single Tenant Net Lease property?
19:26 – What is the difference between Triple Net (NNN) and Double Net (NN) lease properties?
20:55 – Why do buyers have to understand who is selling the Triple Net property in the lease and the value or guarantee backing the person or entity selling?
24:21 – What is a default provision and how does it affect the relationship between tenant and landlord?
26:26 – Why should investors verify that there are no defaults on an NNN property during the due diligence period?
26:57 – What is the difference between assignment and subleasing language for net lease properties?
29:55 – What is the importance of Early Termination Clauses for buyers and landlords?
30:34 – What renewal options benefit the landlord for Triple Net lease properties?
32:03 – What is a “go dark” provision, or noncontinuous operation clause, in an NNN lease and why do investors want a recapture right in the lease agreement with that?
33:54 – What does the tenant’s health ratio indictate to buyers of net lease properties?
34:47 – What is a co-tenancy clause in an NNN lease and why are they not ideal?
36:20 – Why is it important to understand the radius resurgence aspect of a Single Tenant Net Lease?
37:11 – Why do landlords need to focus on the use of language relevant to the marketplace during the lease analysis?
39:47 – Why should buyers get a copy of the Certificate of Occupancy for Triple Net deals?
40:00 – Why should the Astopable Certificate and Subordination and Non-Disturbance Agreement (SNDA) be completed prior to the end of the due diligence period?
Key Points:
1. What to complete during the Due Diligence Period for Triple Net (NNN) lease and Single Tenant Net Lease (STNL) deals
2. Importance of visiting the physical location of a net lease property before investing
3. Know the value and guarantee of the entity backing the sale of a Triple Net lease property
4. Always check the legality of every document for the sale of a Triple Net (NNN) property
For more information contact us here and mention Nothing But Net or simply NNN:
For more information on:
Liberty Real Estate Fund LLC (https://libertyfund.io/)
Nothing But Net is sponsored by:
Go HERE to view DISCLOSURES.
