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Single Tenant Investment - A Solid Investment for Consistent Gains
A single tenant investment is a property investment that gives the
property owner residual returns from a lease, while simultaneously
allowing them to take advantage of a hot real estate market as their
property value increases. The majority of hard working professionals
have used vehicles such as the stock market, 401K, mutual funds, and the
like as their main, if not sole, retirement investment options. With the
volatility of the market in recent years, many of these portfolios have
seen minimal gains and sometimes have experienced losses as well.
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The current national average return on
a single tenant investment is 8-10%. This is very attractive for an
investor looking to sink some capital in a dependable vehicle with
the ability to net an aggressive return. Single tenant investments
that give the greatest return can run $1,000,000 or more. These are
generally highly desirable commercial locations. However, a single
tenant investment of this quality is generally leased by a national
credit tenant. A national credit tenant is a tenant who is credit
rated with a positive rating and generally a high profile retailer
or restaurant chain. Many times these tenants enter into a lease
arrangement, such as a triple net lease, where they are responsible
for the taxes, insurance and maintenance expenses associated with
the property. This gives the owner of the single tenant investment a
maintenance free property with very little risk of collecting their
lease payment. Also, most leases on a single tenant investment are
long term and allow the comfort of having a set return for a long
period of time. This takes away all the volatility of competing
investment options, namely the stock market. Another key advantage
of a single tenant investment is that most of them qualify for
benefits under section 1031 of the real estate code. Section 1031
allows you to sell an existing investment property free of capital
gains taxes as long as you use
the funds to purchase another like investment property. Therefore,
if you currently own a commercial property, you can sell it and use
the proceeds to purchase a single tenant investment that can be
leased in a triple net lease. To qualify for the benefits under
section 1031 you need to identify your new single tenant investment
within 45 days of the closing of your existing investment property
and close on your new single tenant investment within 180 days of
closing on your existing investment property.
In addition with the property almost always located in a highly
desirable commercial location, there is very little risk of the
property losing any value. On the contrary most always, the single
tenant investment property will consistently increase in overall
value over time. To review, the single tenant investment offers long
term, fixed rental income from a credible, respected corporation.
The triple net investment property is maintenance free and free of
expenses with the leasing corporation being responsible for taxes,
insurance and all operational expenses. The single tenant investment
will more than likely increase in value each year. There are tax
benefits available to purchase a single tenant investment property.
With all of these benefits, a single tenant investment is really a
no lose proposition for those who have the funds to purchase one.
When looking for a solid investment with continual gains, look no
further than the single tenant investment.......
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Single Tenant Investment - A Solid Investment for Consistent Gains...read
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