3 Important Things to Consider When Buying a Triple Net Property in NYC
While it is common for property investors to focus on return and rent, a critical error that many investors make when purchasing a Triple Net Property in NYC occurs when they fail to consider the ramifications of including personal guarantees in the purchase contract.
The reason why rents, returns, and a tenant’s creditworthiness are important is that these factors determine how much money will be available for an investor at the end of the term.
1.Reliability of the Tenant (credit)
There is a direct relationship between the creditworthiness of the tenant and the payment of rent. Simply put, tenants who have good credit will pay their rent consistently and on time. Tenants who have bad credit will often not pay their rent or cannot maintain a lease.
When establishing a real estate investment strategy, an investor will often focus on finding a property with increasing rents.
2.Absolute Net Lease
The lease needs to be an absolute triple net lease and should require the tenant to be responsible for the payment of all taxes, utilities, common area expenses, and requires the tenant to maintain the building in its entirety. It is advisable to have a commercial real estate lawyer to look over the entire leasing contract in advance. They will be able to tell you of any liabilities or risks associated with the property or the lease contract. Lease modifications might be required if a new lease will be finalized at closing and having a legally sound contract is the first priority.
3.Legal Net Advisor
It is very important to hire a local real estate lawyer to review or draft the purchase and sale agreement before you sign it. Buyers should also be aware that there are different ways to buy a property, and the type of agreement they sign will dictate the protections afforded to them. For example, many brokerage agreements allow for an unlimited amount of due diligence prior to closing. Other agreements may offer shorter time periods or less protection. In other words, you need to be sure that you have sufficient protections under your purchase and sale agreement.
If you are considering buying a triple net property, schedule a call with one of our experienced real estate lawyers.
Real Estate Lawyer Queens R.A Esq. 88-02 136th St, Jamaica, NY 11418 (718) 206-1555 https://realestatelawyernys.com/