NNN Investing Tips & Tricks

Smart Tips for Triple Net Investing: What to Know Before You Buy

Triple Net (NNN) investing is a powerful tool for generating stable, passive income with minimal management responsibilities. These properties are typically leased to strong national or regional tenants who are responsible for taxes, insurance, and maintenance, allowing landlords to enjoy a “mailbox money” lifestyle.

However, like any investment, not all NNN deals are created equal. Investors must remain vigilant in how they source, analyze, and manage these investments to protect their capital and achieve long-term success.

Below are practical tips, warnings, and strategies to help new and experienced investors make smarter NNN acquisitions.

Tip #1: Work With a Qualified Triple Net Agent

NNN investing is a specialized asset class, and working with a broker who lives and breathes triple net is critical. A skilled NNN agent will:

  • Source on- and off-market opportunities
  • Know which tenants are expanding or consolidating
  • Help you navigate lease structures and cap rates
  • Understand what locations and rent levels are sustainable

A good agent also brings relationships with developers, landlords, 1031 exchange accommodators, and lenders, giving you access to deals you might otherwise miss.

Tip #2: Use a Real Estate Attorney for Lease & Due Diligence Review

While many investors focus on cap rate or tenant name, the lease agreement is your real investment. A good real estate attorney will help you:

  • Review the lease for early termination rights, kick-out clauses, or go-dark provisions
  • Evaluate assignment/subletting rights
  • Check insurance and maintenance obligations
  • Confirm compliance with zoning, environmental, and title matters

Your attorney will also help vet due diligence materials like title reports, ALTA surveys, estoppels, and SNDA (Subordination, Non-Disturbance, and Attornment) agreements.

Tip #3: Understand Market Rent Levels

One of the most overlooked metrics in NNN deals is whether the rent is at or near market. If the tenant is paying significantly above market rents, that sounds good on the surface—until the lease expires or the tenant leaves. At that point, you could be left with:

  • A long vacancy
  • The need to reduce rent dramatically to secure a new tenant
  • A buyer unwilling to pay your asking price due to inflated rents

Look for deals where the rents are sustainable and supported by surrounding market comps. This adds long-term value and increases your exit flexibility.

Tip #4: Location Matters – But Know the Parcel Restrictions

Location, as always, is critical in real estate. Look for:

  • Hard corner or signalized intersections
  • High visibility and traffic counts
  • Proximity to anchor tenants (Walmart, Target, etc.)
  • Growing markets or migration-friendly states

However, just as important is what you can do with the location if the tenant leaves. If you’re buying a pad site (standalone building in a retail center), read the CCRs (Covenants, Conditions & Restrictions) carefully. Some pad sites include clauses that:

  • Restrict the use of the property to one industry
  • Prohibit certain future tenants (fast food, cannabis, medical)
  • Require landlord consent or master developer approvals for any change

These restrictions can cripple the property’s future usability, so have your attorney flag any limitations upfront.

Tip #5: Prioritize Building Reusability

Not all NNN properties are built the same. You should evaluate whether the building is single-use or flexible. Ask:

  • Can the layout work for different types of tenants?
  • Are the ingress/egress and parking setups adaptable?
  • Could this space convert to another fast food, bank, or retail tenant?
  • Are signage and drive-thru approvals transferable?

Single-purpose buildings (like banks or car washes) can be tougher to re-lease than generic retail shells. Ideally, aim for a building that’s versatile or located in a spot where demand for retail footprints remains strong.

Tip #6: Buy Close to 1 Acre, If Possible

Land is an undervalued component in many NNN deals. Buying a parcel that’s close to 1 acre gives you:

  • Greater reuse flexibility for future tenants
  • Better parking ratios, which help meet ADA and zoning codes
  • The ability to subdivide or redevelop in the long term
  • Enhanced curb appeal and marketability

Properties sitting on less than 0.5 acres may limit drive-thru options, restrict parking, and reduce your buyer pool at exit. If you can, choose deals with more land and better site layouts.

Trick to Watch For: Hidden Lease Language That Lets Tenants Exit Early

Some NNN leases include termination options that aren’t obvious unless you review the full lease. These may include:

  • Sales performance clauses that allow the tenant to terminate if revenue targets aren’t met
  • Go-dark rights, where tenants can stop operations but continue paying rent (hurting foot traffic and value)
  • Early termination rights with penalty (tenant pays 6–12 months of rent and walks)

Always verify whether the lease has firm term protections—or you may be buying a much shorter investment than you think.

Trick to Watch For: Pad Sites with Restrictions on Use

As discussed earlier, some pad sites are burdened by restrictive covenants. These could prevent:

  • Medical tenants (due to anchor tenant restrictions)
  • Cannabis sales (even in legalized states)
  • Competing food users (protecting another lease in the center)
  • Automotive uses (due to zoning overlays)

Always request and review the REAs, CCRs, and any ground lease documents to ensure you’re not stuck with a property you can’t reuse or easily re-lease.

Tip: Ask for Store Sales When Possible

Most tenants won’t automatically provide store-level sales figures, but if you can get them, they offer tremendous insight. Look for metrics like:

  • Sales-to-rent ratio (typically a strong store is at or below 10%)
  • Year-over-year sales growth
  • Gross profit margins

Tenants with strong sales are more likely to renew, may expand to adjacent parcels, and offer more negotiating leverage if you’re trying to sell or refinance.

This information is especially important for franchise tenants, where the strength of the operator—not just the brand—matters.

Tip: Understand Lease Structure Fully – Absolute NNN vs NN

Don’t just take the broker’s flyer at face value. Know the lease type:

  • Absolute NNN: Tenant covers all costs—taxes, insurance, maintenance, roof, and structure—with no landlord obligations.
  • Double Net (NN): May exclude roof, structure, or parking lot maintenance, shifting liability back to the landlord.
  • Modified Gross: Landlord pays certain expenses.

A property advertised as “NNN” may not be truly passive, so request a full lease copy and confirm who pays for:

  • HVAC
  • Roof repairs or replacement
  • Parking lot resurfacing
  • Capital expenditures
  • Insurance deductibles

Bonus Tip: Know the Cap Rate Range for the Tenant and Lease Length

Cap rates vary depending on:

  • Tenant credit (investment-grade or not)
  • Lease term remaining (15 years vs 3 years)
  • Rent escalations (flat vs 10% every 5 years)
  • Market location (primary vs tertiary)
  • Asset type (fast food vs medical vs automotive)

Generally, stronger tenants with longer terms and good locations will trade at lower cap rates (4.75%–5.75%), while short-term or less desirable deals may push up to 7.5%–8.5%. Know the market and don’t overpay for “brand names” if the lease or site is weak.

Final Thoughts

Triple net real estate is one of the most reliable ways to generate predictable, long-term income with reduced management headaches. But passive income doesn’t mean passive investing.

By partnering with the right professionals—agents, attorneys, CPAs, and mortgage brokers—and doing your homework on leases, locations, site layouts, and rent levels, you can make smarter acquisitions and minimize future risks.

Whether you’re buying your first Dollar General or your tenth Chick-fil-A, the same rules apply: read the lease, know the tenant, understand the site—and always plan for reuse.

Disclaimer: This article is for informational purposes only and does not constitute legal, tax, or investment advice. Always consult with a qualified real estate attorney, CPA, and licensed broker before making any real estate investment decisions.