Smart Ideas: Guides Revisited

What Is A Leased Investment? Investment grade, long term net leases means the primary aspect of a certain lease structure. Investment grade means the quality of tenant to which the lease is made. On the other hand, long term indicates the general length of lease as well as net leases which refers to structure of these lease obligations. If you wish to know more about these subjects, then I recommend you to read the next paragraphs. Number 1. Investment Grade – this lease is basically lease to tenants that are maintaining a credit rating of Better Business Bureau or even higher. The investment rating is then represented by the ability of the company to repay its obligation. BBB is representing good credit rating according to the agency’s ratings. Only bigger and national companies have the ability to maintain good credit rating most of the time.
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Rating agencies are not monitoring thoroughly franchise and regional tenants. For this, it is ideal that the lease is corporate backed by parent company and isn’t just regional franchisee. There’s a huge difference between the strength and credit of regional franchise owner and the actual corporation itself. Corporate parent will generally provide better rent stability in midst of economic downturn while rent stability is equivalent to improved stability for the price and value of your real estate.
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Number 2. Long Term – most of the time, long term means fixed length obligation in lease term or beyond ten years. There are instances to which the lease option is included by advisors or brokers as part of fixed lease term. It is essential to know what is obligations and options. If for example the tenant is offered an option to renew for additional 5 years after the initial 5 year term, the lease term ought to be considered as 5 year lease with additional 5 years in option and not a 10 year lease. As being a client, it is your job to learn about the rent terms and on how long the tenant is obligated to pay as it can make a big difference as soon as you start considering returns, risks, ability to acquire financing and also your ability to resell property for profits. Number 3. Net Leases – there are two types of leases wherein it’s the tenants who are responsible for operating expenses which include the structure, insurance and the roof and these are Double Net or NN and Triple Net or NNN leases. In pure NNN lease, it is covering such cost through term of lease is called also as absolute NNN lease. Then again, there are those who call it as Triple Net that don’t include expense on roof or structure of the building. As a matter of fact, these leases are also known as modified NNN or double net NN leases.