NNN real estate

Tutto da sapere sull'investimento in immobili NNN e altri RE commerciali

Why should I invest in RE.

Why not stocks, bonds or CDs or even REITs

Direct ownership of RE has 2 advantages over the other forms of investments. RE ownership can yield the high steady returns that exceed most stock investors and other investment types.

You can not reduce your taxes in stocks, bonds or CDs by depreciation.

You can’t avoid capital gains when you sell one profitable stock to buy another.

In RE you can do a 1031 tax free exchange to a property of higher value and pay no capital gains on whatever gains you have on the property you sold.

In theory you can start with a profitable sale of a modest 2 family rental unit and do multiple 1031 sales and new buys until you own a skyscraper and never pay any gains tax all along the way.

With RE purchase, you can get a loan at lower interest than margin loans on stocks, and you can even deduct the interest expense while you own the RE.

You leverage your income in RE if you borrow at lower rate than your RE return.

Here is a numerical example of leveraged return

You buy RE with 7% return on 1M dollars. It gives you 70K a year after all expenses. You put 400K down and borrow 600K at 4% interest,

For that you pay 24K interest to the bank. So you get 70 – 24 or 46K a year on an investment of 400K. Your final return is 46/400 or over 11%.

In an amortizing mortgage loan about half the 46K will go towards principal payments so your debt the following year will be 600-23 or 577K and hence your interest will be reduced. Or the following year even more debt is paid down so your true return increases every year.

Add to that possible property value appreciation and your real return is even greater over the years.

On top of that, add the tax breaks and you are getting hedge fund like returns with your full control and less risk if you know how to find the right property.

This app seeks to help you find the right property.

The big boys like Trump and others can get really low interest loans close to treasury rates which gives them much more or even infinite leverage because the banks may allow them to buy with no money down. Because the rates are so low, they can make money with no money of their own needed. That’s a formula for a path to super wealth.

Here is a website that explains what a REIT is

REITs vs Direct RE ownership

The key difference is both tax and leverage differences

My RE Journey

When I started to work after free CCNY in 1965, I had no debts and no savings. After 8 years at age 30 I saved enough to buy a house and the following year an residential rental property. It helped that my wife also worked and we lived on less than one salary.

We had no RE mentor and learned everything from mistakes we made. I did not do a true 1031 until just recently in 2014. If I had the wisdom I put down in this app when I started, my income and net worth would easily be over 3 times what I currently have. If you see my narrative in Residential and Industrial, you will see my albatross that still drains and haunts me today.

Over the years we moved from pure residential to mixed commercial and residential, one terrible experience in an industrial/warehouse and finally into true NNN.

If I had a mentor early on, I would have moved to NNN much earlier because if done correctly, that form is the most hassle free form of RE investment since as owner, all you do is receive a monthely check. You don’t have to pay utilities, worry about maintenance chores or expenses or pay property tax.

In short, the tenant is supposed to take care of everything on the property as required by a NNN lease.

Even though most of the app related to NNN properties, much of what makes a good NNN investment applies to all forms of RE investment such as good demographics, site and location, pricing, acquisition, negotiation and financing.