Episode 002: Nothing But Net - NNN Show WHY INVEST IN REAL ESTATE?
MICHAEL AND ADAM SHARE WHY REAL ESTATE IS ONE OF
THE BEST INVESTMENTS TO GET PASSIVE INCOME
Hosts Michael Flight and Adam Carswell on the Nothing But Net – NNN Show.
October 10, 2021 | WHY INVEST IN REAL ESTATE
In this episode of the Nothing But Net – NNN Show, Michael Flight and Adam Carswell discuss why real estate is the world’s most proven investment. They share what investors should do to: acquire a safe haven investment in times of global economic storms; avoid stock market volatility during political unrest; and achieve consistent monthly income and cash flow. Michael and Adam also touch on what investment alternative has produced the most stable returns over long periods of time to create value and wealth for investors.
Related Link: Beginner’s Guide to Triple Net Lease (NNN) Investing
Learn more about International Investing and all things Triple Net on other episodes of The Nothing But Net – NNN Show. This show is a podcast all about the benefits of acquiring and owning Net Lease Properties (also known as NNN, Triple Net, Triple-Net Single-Tenant or Single-Tenant Triple-Net Lease properties). Listen to or watch this podcast on the Liberty Real Estate Fund Nothing But Net YouTube channel.
Why Invest in Real Estate
Where do you go in the world to obtain a safe haven investment in times of global economic storms? How do you avoid stock market volatility, where one tweet from a president can send your investments crashing? What investment alternative has produced the most stable returns over long periods of time, creating value and preserving wealth? How can you achieve consistent monthly income and cash flow? Basically, why invest in Real Estate?
Real Estate has always been the number one generator of wealth. You can see it in large families and royalty. What do they all have? Land. Most wealthy people invest in real estate to not only preserve their wealth but also protect against inflation. Steady cash flow is another benefit investors gain from long-term real estate deals, like with Triple Net (NNN) properties. Real estate has always been the number one generator of wealth since humans turned from a nomadic existence, settling down and staying in one place. Millionaire Andrew Carnegie famously said that 90% of millionaires got their wealth by investing in real estate. Gary Keller, bestselling author of Millionaire Real Estate Investor, also said, “No other real estate, no other investment has such a consistent and positive effect on the average person’s net worth as real estate ownership.” Even Mark Twain said, “Invest in land, they’re not making it anymore.” For the most part, land is an asset with intrinsic value.
Real Estate Preserves and Generates Wealth
Real estate has been the proven king of wealth creation for thousands of years because it is a safe haven in times of economic turmoil. There is currently not only a pandemic, there are fires, riots and dislocation. But real estate continues to retains its value, and the type of properties that Liberty Fund invest in (i.e. Triple Net real estate) have held their value during this time. Real estate has tangible and intrinsic value, meaning it is a hard asset similar to gold and other commodities. But unlike those commodities, real estate is a cash flowing asset that generates money for you, and you can also borrow against it. For example, let’s say you’re going to go buy a building. If the building is worth $100,000, a bank might loan you up to 75% of the value. So, you can control a lot more real estate versus controlling a stock market portfolio, portfolio of commodities, or cryptocurrency portfolio. Commercial real estate investments create recurring monthly income. Real estate is the safest investment in times of economic uncertainty, and is a very common investment strategy for many wealthy families. Real estate has traditionally been an excellent hedge against inflation and, with the way governments print money all over the world these days, you might want to consider that.
Advantages of Net Leases
When most individuals first hear and think of real estate, they think of buying, selling and renting residential homes. But there are many different sectors of real estate, including commercial real estate and, more specifically, properties that have contractual agreements known as net leases. With net leases, the tenant agrees to occupy and utilize a building or land from the landlord and assume the maintenance, taxes and insurance of the property. Net leases are also called triple net leases or Net-Net–Net (NNN) leases. The “Nets” are basically the expenses that are paid by the tenant. For example, with an apartment building, you would typically lease the apartment to the tenant and the landlord is responsible for paying the taxes, insurance and maintenance of the building, which is called a gross lease. Conversely, those who invest in net lease properties have to deal with tenants, toilets or taxes. A single net lease is where the tenant pays the rent plus the real estate taxes for the property. In a double net lease, or a Net-Net (NN) lease, the tenant pays the regular rent for the property. So, the tenant might agree to pay $1,000 a month, and then they pay all of the real estate taxes, plus they pay the property insurance. In commercial real estate, the property insurance includes the insurance for the building, so the tenant insuring the investor’s building. They also insure the contents of the inside of their store, which is a separate insurance policy. The building insurance also includes liability insurance, so if somebody walks into the parking lot or into the store and has an accident and sues, the tenant pays for that insurance, as well. The tenant is not only paying your taxes but your insurance too, so that eliminates some of the guesswork in where you think your income is going to come in, as the investor.
Benefits of Triple Net (NNN) Leases
The next type of lease is the Net-Net-Net, or triple net (NNN) lease lease, which has the tenant pay the base rent, taxes and insurance. For example, when an investor buys a single Starbucks building, in most cases that tenant/Starbucks is paying their monthly rent and all of the property taxes for not only that building but also for the land, parking lot and drive-thru. They are also paying for all of the insurance involved with that building, whether it’s fire insurance, earthquake insurance or general property insurance. They pay for the liability insurance, as well, in case something happens in which a person gets hurt or something else unexpected occurs. The tenant is also paying for the maintenance costs in a pure triple net lease. So, the tenant fixes the roof, the building, miantains the interior, takes care of the landscaping and the parking lot. In case you live in northern climates, the tenant also pays for the snow plowing. In a triple net lease, the tenant pays you rent, plus pays for everything else, and takes care of everything for the property. The way to remember what you know the tenant pays in triple net lease is the acronym T.I.M., which stands for Taxes, Insurance and Maintenance. A triple net is one of the best ways to go if you are a property owner.
The advantage of NNN leases is that the property owner knows that they are going to get a set rent, and that there is not going to be fluctuating expenses. Triple net leases create a stable, predictable yearly return, so you know that your net operating income isn’t going to increase or decrease with. This type of real estate is especially good with real estate taxes too because there are some jurisdictions that keep raising real estate taxes.
Net Leases Have Long-Term Leases
Tenants, in a lot of situations, would prefer to lock in longer term leases. With net leases, investors can lock in a long-term lease and get a landlord because they’re going to spend a lot of money advertising and building up a location, especially if they want to control their costs and they like the real estate location. They want to know that they’re going to be there for a substantial amount of time. Net leases offer stability for both the landlord and the tenant with a long term lease, and they know that they can control the quality of their services and that they can protest the real estate taxes. Lease expenses are 100% deductible, especially single-tenant triple net (STNL) leases that give the tenant visibility, accessibility and parking. The main-and-main location of many STNL buildings serves as a billboard for brand awareness. Tenants of triple net leases know that they’re locked into a long-term lease, so they can put a lot of their capital into expanding either their store, operation or whatever part of the business that needs help.
Types of NNN Lease Tenants
The most common tenants for triple net leases, and especially single-tenant triple net leases, are essential businesses (i.e. dollar stores, fast-food chains, drugstores and automotive service shops). But, there is a lot of activity with other types of tenants, as well. For example, there’s a number of properties on the market for single-tenant net lease office buildings for companies like Amazon and Google that lease a whole building. Another very popular lease, usually for larger institutions and real estate investment trusts (REITs), is a sale-lease agreement. For example, these types of investors may buy an industrial plant or a group of industrial plants from a particular owner, like let’s say a widget manufacturer that had plants in Wisconsin, Florida, and California. These larger institutional investors will propose to sellers that they can free up the capital that that have in this real estate by doing a sale-leaseback where the investors do a long-term lease with them and the seller has all the ownership responsibilities, like they had when they owned the building; they just won’t own it anymore. The investor gives all the capital from the sale to the seller, which unlocks the money that is just sitting there on their balance sheet. By selling the property to the investor, the seller enters into a long-term lease, and they can then fully deduct all of the lease expenses. The reason sale-leasebacks are appealing to sellers is because they could pay off the mortgage on the property and deduct the principal payments. Sale-leasebacks have been really popular during the pandemic because banks weren’t lending money and only one the government was offering money. But, some fairly large companies that could tap into the assets on their balance sheet would opt for a sale-leaseback to they get the money that they needed in times of distress.
The Nothing But Net – NNN Show is a presentation of Liberty Real Estate Fund which is built on the wealth creating cash flow benefits of Net Lease properties. You can find out more about Liberty Real Estate Fund by visiting our HOW IT WORKS page or you can schedule a call with one of our advisors:
*Note: Liberty Real Estate Fund LLC and Liberty Equity Management LLC (collectively “Liberty”) have made every attempt to ensure the accuracy and reliability of the information provided. Liberty cannot not accept any responsibility or liability for the accuracy, content, completeness, legality, or reliability of the information contained herein. The information herein should not be considered legal advice, tax guidance, or financial counsel. You should consult your own professional advisors before making any decisions or investments.
About the Podcast Hosts:
Michael Flight is a founding principal of Concordia Realty Corporation, Concordia Equity Partners LLC and more recently CEO of Liberty Real Estate Fund, a net leased property fund curated to create a conservative, safe haven portfolio of long term, Single-Tenant Net-Leased properties designed for geographic diversification, tenant credit diversification and industry diversification. Liberty Real Estate Fund has been compared to mutual fund for real estate investing
Michael is a real estate entrepreneur who is an expert in Retail Real Estate (Shopping Centers and Single-Tenant Net-Leased investment, leasing, operations, and redevelopment. Michael has been active in commercial real estate over the past 35 years and has handled more than $500 million worth of real estate transactions. Michael has extensive experience in development, leasing, sales, property management, and innovative financing techniques.
Michael has been featured on The Real Estate Guys Radio Show, Cash Flow Connections podcast, and the Cash Flow Ninja podcasts to name a few. Michael is also a well-known speaker at FreedomFest, Investor Summit, the Intelligent Investors Real Estate Conference, the Multifamily Investor Network Conference, and the Global Family Office Summit in Dubai. He is host of the Nothing But Net – NNN Show a podcast all about Net Lease, Triple Net and NNN investing. Co-host of the Chicago Blockchain Real Estate Collective and co-founder of the Blockchain Real Estate Summit.
Adam J. Carswell is a real estate entrepreneur, LinkedIn Power-Networker, and New Media Marketing Maverick. He is known as the “Voice Of Liberty” for his work hosting the Nothing But Net – NNN Show, the Chicago Blockchain Real Estate Collective, The Liberland Show, and Liberland National Anniversary Ceremonies. His expertise in social marketing and network management set him apart from the crowd. Adam is also a member of RaiseMasters, the #1 Mastermind for elite capital raisers, and is a Co-Founder of the Next Level Mastermind.
Jason has also been featured as a guest on NPR, the Nothing But Net Show podcast, Simple Passive CashflowPodcast, and Commercial Real Estate Investing from A-Z podcast.
Liberty Real Estate Fund LLC is The World’s First Single-Tenant Net-Lease Security Token FundTM, joining 30 plus years of institutional real estate investment experience with blockchain technology to deliver very stable, diversified, tax efficient returns combined with liquidity, security and transparency.
Liberty is a real estate investment fund that acquires Single-Tenant Net-Leased (NNN) essential business retail, auto service and medical properties in the United States. It is designed for investors to achieve: Geographic Diversification; Industry Diversification; Tenant Credit Strength and is built with hard assets that have intrinsic value. Our portfolio of Net Lease properties is constructed with brand-name Essential Businesses operating in high growth markets throughout the United States. These Net Lease assets have long term contractual rents backed by excellent brand name, well capitalized companies.
Liberty is focused on investing in high quality, well located Single-Tenant Net-Leased (NNN) properties in targeted high growth, low tax areas of the United States. The portfolio has been specifically designed to provide stable, recession resistant income combined with inflation protected wealth preservation and equity growth.
DISCLOSURES, LEGAL AND TAX COUNSEL: Liberty Real Estate Fund LLC and Liberty Equity Management LLC (collectively “Liberty”) and their affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction or undertaking. Liberty highly encourages individuals and investors to seek the counsel of a qualified attorney as well as seek the counsel of a tax professional or Certified Public Accountant (CPA) to determine if there are any potential tax liabilities or consequences as the result of anything contained herein. NO GUARANTEE: All users of this website should understand there are NO GUARANTEES of any success, outcome or profitability of any transaction or undertaking, expressed or implied by Liberty or any of its members, shareholders, officers or affiliates and will NOT be liable for any financial or other losses or damages incurred as a result of any undertaking. Go HERE to view complete DISCLOSURES.