Over the past nine years, Shaya Braverman has established himself as an expert in commercial real estate investing, handling the sales and leases of establishments ranging from restaurants (Doughboys Cafe, Sur Restaurant) to boutiques (Round Two Clothing, M. Cohen Designs) to dealerships (Ducati Beverly Hills) and national brands (Walgreens, 7-11). Beyond crunching numbers, Shaya assesses a client’s lifestyle when determining which type of investment is a good financial fit, and he often deems Triple Net Investments (NNN) the best way to capitalize on an existing arrangement. Upon noticing that a recent client wasn’t taking advantage of the equity on his mid-city duplex, Shaya assisted him in selling the property and purchasing an Autozone in Memphis, doubling his income overnight.
Read on to discover the fine details of Triple Net Investments, how Shaya and his team work to mitigate risk while increasing the benefits attainable from NNN, and how you—if you so wish—can put an end to chasing rents forever.
PT: What’s the first thing we should know about NNN?
SB: NNN, or Triple Net investments, is a type of investment where the three major expenses are covered by the tenant: Net – Property Taxes, Net – Property Insurance, and Net – Common area expenses and Maintenance. When you have an investment like this, your management is reduced to a minimum. The tenant pays rent every month, plus an additional amount which is prorated for the year and covers the full amount of those three expenses.
PT: What kinds of expenses fall under “Net – Common area & Maintenance”?
SB: Net – This Net can include but is not limited to the following categories: parking lots, exterior lights, structural, roof, plumbing & electrical issues, both for interior and exterior locations.
PT: Who is the ideal candidate for this type of investment?
SB: NNN is multi-beneficial for any owner who has owned their residential property for over two years to reach out and examine the possibility of significantly increasing their revenue and reducing their management.
PT: Do Triple Net Leases go hand-in-hand with passive income?
SB: Yes, true NNN leases equate to passive income. I have numerous clients that have never once seen their out of state NNN investment. For example, somebody purchases a Wendy’s in Idaho and with Wendy’s being an Absolute NNN deal—or a “Set It And Forget It” deal, as I like to refer to it—Wendy’s pays all the bills directly to the vendors, including property insurance, common area janitorial and maintenance, structural, and real estate property tax. The only piece of mail my client receives in this instance is the monthly rent check, which he/she deposits and never thinks about again.
PT: What risk is involved for the proprietor and how do you reduce that risk?
SB: One of the main reasons that investors look towards NNN properties is the reduction of risk. No investment is ever risk-free; However, Triple Net properties provide you with levels of securities that other investments can’t guarantee.
We typically focus on BBB+ or higher Credit Rated companies, we examine the location of the investment and we (in some cases) review the rent to sales ratio. With these combined factors we are able to feel comfortable moving forward that these large companies won’t fail and shutter all these stores and locations at once.
Finally, we recommend that all our clients obtain Loss of Rent insurance. For a minimal cost, even if the worst thing happens—like the entire Burger King company going bankrupt—the insurance company will still cover the rent throughout the lease term.
PT: What major benefit do your clients experience?
SB: More personal freedom to spend time how they want to. Most of my clients have been able to free up their time and travel more. I helped three siblings in their late 70’s invest in a large property with an internationally well-known tenant. Being older and having other things to focus on, including their retirement and family, they were a bit hesitant at first. Now, they regret not having worked with me sooner! No more chasing rents, no more paying bills…they have the luxury to travel and spend time with their families without ever having to worry about issues at their building.
PT: Any additional ‘secret sauce’ that sets you apart from the rest?
SB: I have built up a database of owners, tenants, etc. who constantly share off-market deals with me that are not available to the general public.