Michael Rosen had been in the real estate business long enough to know what he didn’t want anymore. At fifty‑seven years old, he owned a mid‑sized apartment building in Queens, New York. The building had been good to him — it had appreciated considerably since he bought it fifteen years earlier, and it provided steady cash flow. But Michael had grown tired of the constant headaches.
Every week it was something new. A broken toilet in Unit 3B. A tenant complaining about noisy neighbors. A late rent check that required multiple phone calls and emails. Then there were the bigger issues: the annual property tax hikes, roof repairs, and the never‑ending cycle of replacing boilers and water heaters.
“Tenants, toilets, and trash,” Michael muttered under his breath one night as he paged through his stack of maintenance invoices. He had been a hands‑on landlord for years, priding himself on keeping the building running smoothly. But the grind had caught up with him.
For the first time, he asked himself a question he had avoided for years:
“What else can I do with this building?”
The Spark of an Idea
The next morning, Michael met his longtime friend and financial advisor, David, for coffee in Manhattan. He shared his frustrations.
“I can’t keep doing this,” Michael said. “I’m spending more time managing problems than enjoying life. I got into real estate for freedom, not to be a full‑time plumber.”
David smiled. “You ever heard of triple‑net properties?”
Michael shook his head. “Not really. What’s that?”
David leaned in. “NNN investing — triple net lease properties. They’re 100% management‑free. No toilets. No tenants calling you at midnight. You own the property, but the tenant pays for taxes, insurance, maintenance — everything.”
Michael raised an eyebrow. “Sounds too good to be true. What’s the catch?”
“The key,” David explained, “is buying the right tenant, the right lease, and the right location. Think strong national brands with corporate guarantees. You trade the headaches of being a landlord for a steady, predictable check each month.”
For the first time in months, Michael felt a spark of hope.
Exploring the Option
That afternoon, Michael dove into research. He discovered that NNN investments were incredibly popular among apartment owners like him who were ready to retire from active management. He learned that through a 1031 exchange, he could sell his apartment building, defer the capital gains tax, and roll his equity into a new property — all while preserving his wealth.
The numbers were compelling. His building in Queens was now worth $3 million. If he sold it outright, he’d face a crushing tax bill on the gain. But with a 1031 exchange, that money could continue working for him, untouched by the IRS — at least for now.
He began looking at properties online: drugstores, dollar stores, convenience stores, and fast‑casual restaurants. One property immediately caught his eye: a brand‑new Chipotle Mexican Grill in Florida, listed for exactly $3 million.
The details made his heart race:
- 15‑year absolute NNN lease
- 6% cap rate, translating into $180,000 per year in net income
- 10% rent increases every 5 years
- Corporate guarantee from Chipotle Mexican Grill, Inc.
- Located in a bustling retail corridor surrounded by other national tenants
It checked every box.
The Sale of the Apartment Building
Michael decided to take the leap. He listed his Queens apartment building through a commercial broker. To his surprise, within 60 days, he had a qualified buyer under contract at his asking price of $3 million.
The process wasn’t without stress. The buyer’s lender required a detailed inspection, and Michael had to produce years of operating statements, tax returns, and maintenance records. But compared to the endless stress of managing the property, the sale felt like a liberation.
When the deal closed, Michael immediately triggered his 1031 exchange. His qualified intermediary held the funds, giving him 45 days to identify replacement properties and 180 days to close.
Closing on the Chipotle
Working closely with David and a NNN investment broker in Florida, Michael made an offer on the Chipotle. The numbers lined up perfectly.
Purchase Price: $3,000,000
Annual NOI: $180,000
Cap Rate: 6.0%
Lease Term: 15 years absolute NNN
Rent Increases: 10% every 5 years
Guarantee: Chipotle Corporate
The due diligence process was shockingly simple compared to what Michael had endured with his apartment building. There were no tenant estoppels to chase, no deferred maintenance concerns, no utility reconciliations. Chipotle paid for everything. All he had to review was the lease, the rent schedule, and a clean environmental report.
Thirty days later, the closing took place.
Life After the Exchange
The first rent check arrived the following month: $15,000 deposited directly into his account. Michael stared at the number on his screen and couldn’t help but smile.
For the first time in decades, he wasn’t responsible for clogged drains, broken elevators, or noise complaints. He didn’t have to budget for a new roof or fight with the city over property taxes.
Instead, he had true passive income — $180,000 per year, guaranteed by a publicly traded company, with scheduled increases that would grow his income over time. In five years, his rent would jump to $198,000 annually, all without lifting a finger.
He had traded stress for stability, headaches for freedom.
Reflecting on the Journey
Over dinner with his wife one evening, Michael shared his thoughts.
“You know,” he said, “I used to think being a landlord was the only way to build wealth in real estate. But this — this is different. I’m still in real estate, but I’m not in the business of fixing toilets anymore. I finally feel like I have the freedom I always wanted.”
His wife smiled. “And you’re not cranky all the time.”
Michael laughed. “That might be worth more than the rent increases.”
Why NNN Was the Right Move
Michael’s story is one of thousands like it. For aging landlords, busy professionals, and anyone tired of the grind of active management, NNN investing offers a powerful solution.
By reinvesting through a 1031 exchange, Michael achieved three critical goals:
- Deferred Capital Gains Taxes – saving him hundreds of thousands of dollars in taxes.
- Secured Passive Income – a 6% return with no landlord responsibilities.
- Protected His Wealth – with a corporate‑guaranteed, long‑term lease in a strong location.
Epilogue
These days, Michael spends more time traveling with his wife, visiting his grandchildren in Florida, and golfing on Wednesday afternoons. The monthly rent from Chipotle arrives like clockwork, and he no longer worries about broken boilers or late‑night phone calls.
When friends ask him if he misses being a landlord, Michael just smiles.
“I still own real estate,” he says, “but I don’t manage real estate. That’s the difference.”
For Michael, the shift from tenants, toilets, and trash to true passive income was life‑changing. And all it took was asking the right question at the right time.