NNN loans also known as Credit Tenant Leases (CTL) are a great financing tool. It is a good alternative to traditional financing if you are looking to build equity.
NNN refers to a triple net lease also known as a net-net-net lease. With these leases the tenant pays all the expenses for the building such as real estate tax, insurance and other operating expenses. That means whatever you get for rent goes to your pocket assuming no mortgages or notes.
This is where a NNN loan comes into play. Say you want to own a single tenant property but don’t have a lot of money to put down you can as high of an loan-to-value as you want. So long as the payments are equal to or less than the rent. So hypothetically you could receive 100% if you find a great deal.
Some other benefits of a NNN loan:
- Loan backed by lease
- Non-recourse
- Up to 100% LTV
- Loan term typically duration of lease
Requirements of Loan:
- Tenants must be credit worthy
- Case by Case tenant evaluation available
Tenants can be:
- Government Offices
- Hospitals and Healthcare Facilities
- Office Headquarter
- Manufacturing, R&D, Laboratory Facilities
- University/College Facilties
- Distribution and Warehouse Facilities
- Data Centers
- Bank Branches
- And More