triple net leases

I am new to the world of RE investing and would liek some help in evaluating the world of triple net leases. I found a deal that has a corporate guarantee and but am unsure what are the risk involved.

The main risk in regard to a NNN lease is similar to that of any other lease. What is the risk that you are going to get paid by the tenant? In this case the tenant is a business entity instead of an individual person. You need to evaluate the credit/balance sheet/portfolio/etc of the company on the lease. Do you have a guarantee from a national chain/franchise?

The main risks are, in this market, your tenant could declare bankruptcy.

The other risk is that the really big boys have really big lawyers, so you want to make certain you are well covered and legal.

Yes, there is a corporate guarantee. My question is how would that hold up in a court of law, would that be the same level as debtor and get first rights? I am looking at a national chains like Burger King etc

Don’t know the legal side of it, but you should definitely have your own attorney involved. However, for a beginner, I recommend you find a property that will actually make you some money. You can search several websites for listings on NNN properties and see what kind of returns are possible. Hint: they won’t make you rich. Low risk, low return. If you put 20% down on a NNN property, you’ll probably be out of cash and you might get 8-10% return on your money with slow growing equity - it doesn’t put you in a position to buy more properties. You need to find a property where you can increase the value beyond what is simply expected from rent escalations.

If you want to read a decent book, check out The Armchair Real Estate Millionaire. It was written by a broker in TN that specializes in NNN properties. It doesn’t discuss all the risks and issues that should be considered, but it’s very straight forward with no fluff. It’s good for informational purposes, but his obvious goal is to eventually sell you a property he’s listing.