Reading Time: 2 minutes This guide will explain the triple net lease type of commercial real estate.  A triple net lease is a typical real estate net lease agreement. The most distinct characteristic of this type of lease agreement is that the tenant pays all the property expenses on top of rent.  Triple net leases (NNN) differ from single and double net lease agreements.  Key Takeaways: Triple net lease (NNN) is a type of lease agreement where the tenant pays all property expenses and a small fixed rental fee. These expenses include real estate tax, building insurance, maintenance fees, and utilities. Triple net leases tend to have a lower fixed rental fee. Triple net leases are popular real estate investments for investors due to providing lower risks and steady income. What Is A Triple Net Lease? A net lease is an agreement where the tenant pays to use a property. There are different net leases, including single net lease, double net lease, triple net lease, and modified net lease. The net lease type explicitly tells the tenant what they need to pay. For example, a tenant can pay a portion or all of the property’s taxes, fees, maintenance, and utilities. Triple net lease real estate is the least common agreement out of all. That’s due to the unfavorable terms of the agreement towards the tenant and the low-risk, high-income returns for the investor’s side.  A triple net lease real estate agreement might incur a lower rent fee, but the tenant has to cover all remaining property taxes, insurance, maintenance and repairs, etc. Despite the lower rent fee, the remaining costs can overwhelm a business’s lease budget. Advantages and Disadvantages of Triple Net Lease in Commercial Real Estate What makes a triple net lease favorable for both tenants and landlords is that properties are easier to manage. After all, the tenant has to cover all operational expenses. However, these expenses can quickly overwhelm the tenant. Therefore, there are good and bad sides to triple net leases.  Advantages of Triple Net Lease For tenants:  The tenant determines how to maintain the property. The tenant controls the costs for maintenance, upkeep, and property appearance.  Should the tenant choose to, they can select the insurance carrier. The tenant can also protest the taxes and get a more favorable lease.  For landlords: The landlord gets a steady and low-risk income stream. The landlord isn’t involved in maintenance, utility payments, taxes, and property management costs.  Disadvantages of Triple Net Lease For tenants: The tenant is responsible for managing the property and must ensure it is not falling into disrepair. The tenant also takes on the responsibility of paying property tax and risks increasing insurance prices. The tenant might overpay for the relatively lower rent fee if the landlord overestimates the total operating costs.  The chance for unexpected costs to occur. For landlords: The landlord might find it challenging to find tenants willing to sign a triple net lease commercial real estate lease.  The tenant’s creditworthiness is key for making this type of agreement work. After all, they pay for all operating expenses.  Conclusion That concludes this short guide on the triple net lease commercial real estate lease agreement. This type of net lease agreement offers tenants and landlords several advantages, but the disadvantages must also be considered.

Reading Time: 6 minutes Net leases have become a staple in real estate for one reason alone: they are often a necessity for startups. After all, most business operations need to choose whether they will lease or buy a space. Those who opt for the former will often choose a commercial building, which brings them one step closer to net lease real estate. Although commercial buildings include their fair share of pros and cons, they also serve as an introduction to lease agreements, of which there are too many to count. Net leases, for example, are one of the more common types of commercial leases that startups come across, but even among them, there are many variations. The purpose of this article is to give you, the reader, a more detailed look into how net leased property has shaped real estate investing in addition to the benefits and drawbacks that come with it. So, what exactly is a net lease in real estate, and why should you care? KEY TAKEAWAYS What’s in a net leased property? Net leases and net leased property imply that the tenant will pay for more than just the space. Often, the tenant is contracted to pay for maintenance, property taxes, and utilities. This is part of why net lease investing is becoming popular, as the investor can potentially reduce plenty of costs. At its core, that is what a net lease in real estate means. However, there is more to it. In fact, net lease real estate comes in many shapes. Net leases are contracts that remain malleable until signed. Therefore, a net leased property can include various additional expenses based on the contract form, which may even include things such as insurance and repairs. As a future tenant, it would be best to choose a net lease that fits your needs and the needs of your business. After all, startup businesses specifically need to cut down on as many costs as possible. As a result, knowing the pros and cons of different net leases is a requirement. At least if you are planning on running a successful business. But before that, you should be familiar with the most common types of net leases in real estate. Net lease types in real estate The net leases are influenced by whether the tenant pays a part or all of the expenses. As mentioned, the payment can include maintenance, taxes, utilities, and other costs of owning a property. In short, there are four general types of net leases that you can expect as a tenant: Single net lease The single net lease, by definition, is a type of lease where the tenant is required to pay property taxes in addition to the fixed rent fee. This type of net lease is considered the most risk-free lease for the tenant, as the property taxes are paid directly through the landlord. The process allows the landlord to ensure that the payment is enough to cover the costs on time. Tenants should keep in mind that property taxes can increase over time. However, these increases are often negligible and would not impact the majority of business tenants. Unlike double and triple net leases, the single net lease allows businesses to plan their budget ahead of time because tax-related expenses rarely vary. In some cases, the overall rent of single net leased properties is lower than the fixed rent fee because of added costs. Double net lease The term double net lease answers the question of what a net lease in real estate is. After all, the double net lease is the most common commercial real estate lease type. Tenants who opt for a double net lease pay taxes and insurance. Similar to the single net lease, the fixed rent fee is often lower when under a double net lease. Since the tenant does not pay for maintenance, businesses can still have an accurate budget plan. The double net lease remains a valuable tool for net lease investing because it adds an extra layer of security for the landlord, who no longer has to worry about timely payments. Triple net lease The triple net lease has the tenant pay a considerably lower fixed rent fee while covering all other costs. Such costs, for example, often include taxes, insurance, and maintenance. The triple net lease is not common in commercial real estate because while the fixed rent fee may be low, the tenant can end up with plenty of additional costs. The triple net lease in real estate allows the landlord to have a lot less responsibility and freedom, but then again, very few tenants look for triple net lease commercial real estate. After all, fewer businesses are looking to spend more money on additional costs than they would have under a gross lease. And what if the tenant does not want to pay any additional fees? That type of lease is called a gross lease. Gross leases, unlike net leases, would allow the tenant to use the property by only paying the flat rental amount. Therefore, all additional expenses fall on the landlord, and the tenant is free of any additional charges. In addition to gross leases, tenants can opt for a modified net lease, which would allow them to follow a specific set of terms that they have agreed upon with the landlord. Net lease – pros and cons At this point, you are more than aware that businesses can argue for a better net lease. Moreover, you have a general idea of the expenses that each net lease involves. Still, there are a set of benefits and drawbacks that might not be evident for those who are new to neat leases in real estate, and they are: Pros: Negotiable ratesAs we mentioned, fixed rent fees for net leases are often significantly lower than those of a gross lease. The main reason is that the tenant pays for additional costs, such as taxes and insurance. Consequently, the landlord can lower the fixed rate

Reading Time: 4 minutes The topic of cash to close vs closing costs revolves around a great deal of misinformation. Many people think it’s a hot topic, which is why the cash to close vs. closing costs debate is gaining traction, but nothing can be further from the truth. It would be better to phrase it as cash to close and closing costs. After all, these two terms are dissimilar but not entirely unconnected. This hot topic, however, is not as controversial as it may seem. The terms have a lot to do with loans and real estate. Some even see one as an implication of the other. Nevertheless, by the end of this short read, you will be familiar with the concepts of cash to close, closing costs, and everything there is to know about them. KEY TAKEAWAYS Who’s Closing? Before we start dealing with these terms individually, here’s who they would interest: Homebuyers – anyone currently purchasing a home or planning on doing so should know what these terms entail. After all, they are crucial to both the process and, as a result, the buyer. Buying a home is accompanied by many worrisome technicalities, so having these two concepts covered can save you a great deal of effort in the long run. Homeowners – those who own homes, and are looking to sell them in the near future, should be more than familiar with these terms. After all, part of having a successful sale is based on knowing your buyer, and you can’t do that if you don’t even know how to sell your real estate properly. Regardless of whether you are part of the former or the latter, or even none of the abovementioned, it certainly won’t hurt to know a thing or two about the process of dealing with real estate. Cash to close vs closing costs – let’s get to it! Closing Cost Closing costs are the fees needed to close on a home loan. These fees come about because you need to contact a mortgage company to initiate the process. As you may have guessed, closing costs depend on many variables, like the type of loan or the amount of money borrowed. Still, some standard fees are almost unavoidable, such as: Appraisal and attorney feesYou need to know how much your home of choice is truly worth, or you risk overpaying. That’s why appraisal fees are a necessity. In fact, you might not even be able to get a loan without having the housing appraised. Similarly, attorneys rack up fees because you can’t finalize the transfer without one. Title insurance and application feesTitle insurance fees are paid in order to ensure that the person you are buying from has the right to sell the property. Although it’s always better to be on the safe side, you don’t technically have to look into the property and the previous owner. As for application fees, if borrowing money, you simply can’t avoid them. That’s the first part of the cash to close vs closing costs discussion. Now, we cover the term cash to close. Cash to Close In short, cash to close refers to the amount you pay to finalize the closing process and successfully purchase real estate, such as administrative costs. The step itself is crucial to real estate investment and could help you understand why wedge deals are becoming a lucrative investment option. Overall, the term includes: Closing costs and down paymentAs we have already covered the main closing costs, we’ll focus on down payments. The term down payment references the amount you have decided to pay upfront. This could be anything between 3% and 20%, although conventional loans often require a rate of approximately 20%. Mortgage points and creditsTo avoid confusion, mortgage points are essentially discount points. This means that they are a type of fee that the buyer pays to a given lender in order to reduce interest rates. In general, these fees are a part of the concept of cash to close. Credits, on the other hand, are the exact opposite. You can use them to reduce closing costs by increasing interest rates. And that would be the second part of the cash to close vs closing costs. At this point, it should be clear that there is some overlap between the two terms, but they don’t refer to the same thing. Conclusion As it turns out, cash to close vs closing costs is a discussion with few overlapping points. Nevertheless, these two seemingly similar yet fundamentally different points are important for anyone looking to dabble in real estate. Keep in mind that the first term, closing costs, refer to the fees needed to close on a home loan. The second term – closing costs, is used to reference the amount of money required to finalize the closing process and successfully purchase real estate. Knowing this, you are ready to start delving deeper into the world of real estate investments. At the very least, you will not be confused by the mention of these two terms ever again! Frequently Asked Questions:

Reading Time: 4 minutes What exactly is REPE? Real estate private equity is a debate topic that has been gaining traction. Many investors want to be a part of the tried and tested real estate industry. While REPE is only a part of this overarching industry, we cannot deny its importance. In truth, real estate can be drastically different depending on numerous factors. It can be influenced by the type of company you are running or investing in, the property location, and even the strategies behind the business itself. Many investors think of real estate private equity as a branch of real estate investing. More importantly, they see it as an advantageous option that could bring in large amounts of money. Two questions remain – what is REPE, and is it profitable? What is REPE? The term REPE is used for investments in real estate. More specifically, it can be used to refer to individuals or firms that are directly investing in real estate. The only condition is they must have used private capital instead of public capital for their investment. Sounds complicated, right? But it does not have to be. It does, on the other hand, usually involve noticeable risk. Usually, real estate private equity firms are the ones that deal with this type of investing. They use outside investors to accumulate capital and, consequently, use said capital to invest through wedge deals. This means their investments usually revolve around maintenance and renovation. It is through these means that investors maximize the chance of a favorable return on costs. If it is still not making any sense, it might be better to hit those real estate private equity books and get a better idea of what this type of investment entails. There is no shame in wanting to understand the topic thoroughly before you invest. The thing about these real estate private equity firms is that they usually focus on a specific type of real estate. As far as I know, REPE firms mainly deal with commercial real estate. By commercial real estate, I mean industrial sites, retail facilities, offices, and even hotels. In my experience, some REPE firms deal with residential real estate, but even when they do, they often look for wedge deals that they can rent instead of sell. Now that we have covered what REPE is, let us go into more detail about how real estate private equity firms operate. Working the Industry As we mentioned, REPE is a part of the real estate industry, which is one of the most profitable industries out there. In fact, real estate revenue in the US alone is estimated at $370bn in 2022. Additionally, analysts are expecting annual growth of 3.71%. You do not need the real estate private equity books to know that REPE, as part of a gigantic industry, is a lucrative branch. We mentioned that REPE firms usually raise funds in order to invest. We do not need to get into how these firms raise money, as it is enough to know that they often accumulate capital through funds and individual investors. Yet, they rarely cooperate with competitors. Therefore, they rarely partner with other REPE funds. In terms of investment length, they often last between 5 to 10 years. After the first few years have passed and a firm has acquired a property, it would often enter a holding period that lasts for a few more years. During this period, the investors must renovate the property in order to ensure profitability. The investor can also choose to rent out the property, but most skip this step, as an attempt to maximize returns can also end up costing the investor. In time, the property is sold, and the investors and involved parties reap what they have sown if everything goes according to plan.So, how do you become a part of this profitable industry? Developing a Career The best way to become part of this industry is by joining a REPE fund. Most beginners start as analysts, spending approximately 2 to 4 years familiarizing themselves with the ins and outs of investing. After the initial adaptation period, many are given the chance to become associates. Those with stellar records can keep climbing the ladder and increase their real estate private equity salary. That, however, takes years of dedication and a bit of luck. Either way, that is the easiest way to launch your career. The work itself is based on two to three groups. These groups end up dealing with either acquisition or assets. The former has to negotiate and land deals for the latter to manage acquired assets. Some might say that acquisition is more demanding than asset management, but one cannot function without the other. Still, if you are trying to maximize your real estate private equity salary, you should try to be part of the acquisition group. It is no secret that because they usually land deals, they get a higher salary. If you are not as concerned about your salary and would rather not participate in stressful activities, asset management is the better option. Afterword The real estate private equity industry is as profitable as it is risky. It is certainly not for the faint of heart, and your sacrifices may not always be worth the rewards. If you are looking to invest in REPE, you should first spend as much time as possible becoming acquainted with asset acquisition and development. On the contrary, if you are adamant about being part of the industry, you should consider joining a REPE fund. It is competitive and stressful, but you are more than compensated for your hard work. Nonetheless, knowing more about the industry and the strategies behind the investments is the first step you need to take to embark on your journey. FAQ: What are the biggest REPE firms in the USA? Without a doubt, those would be Blackstone Group, Starwood Capital Group, and Lone Star Funds. What is the salary for someone working in this industry?

Reading Time: 4 minutes A wedge deal in real estate is purchasing a property worth less than the potential market value. In real estate investing, a wedge refers to a strategy where the buyer scouts for properties that have the potential to be worth around the market value with minor cosmetic work. The strategy includes making low-cost renovations. A property that needs high-expense renovations isn’t a good match for this strategy. This guide will look at what a wedge deal is, how effective it is, how to make the strategy work for you, and provide several tips to identify possible investments.  Is A Wedge Deal A Good Real Estate Investing Strategy? A wedge deal is a good real estate investing strategy if you do it right. Since renovations are crucial to making the strategy work, it’s only a good deal if you can renovate the home and still make a profit. If you put too much money into the renovations, you will end up paying more than what you’ll be getting in return. Therefore, the upfront and subsequent renovation costs are a crucial part of making wedge deal work in real estate.  There are many ways to make money through real estate. A wedge deal is one way to turn a quick profit. But considering that real estate is a local market, plenty of factors will determine if you can make a profit out of a wedge. For any real estate investor who wants to wedge a house, the key concept is to avoid properties with extensive repair needs.  How To Make A Wedge Deal Work For You? Any experienced real estate investor will tell you that wedge deals in real estate are difficult to come by. A house below market price doesn’t just miraculously fall on your lap. To make the strategy work for you, you must do your research. That’s why eager real estate investors that look for wedge deals spend more time identifying a potential property. While real estate wedge deal experts have all kinds of means of identifying a wedge deal, here are a few things to consider that will help you do it much more efficiently. Not every seller is desperate to sell their property for any amount. Some sellers face personal issues that play a crucial role in getting the property below the market value. You need to be on the lookout for sellers going through a divorce, facing debt, and displacement.  These sellers are more motivated to sell due to the circumstances they find themselves in.  Another way to make a wedge deal strategy pay off is to look specifically for properties in need of renovation. In real estate investing, looks are everything. A buyer will never commit to a property that looks terrible. Regardless of the price, modern homes sell for much more and much faster. A deteriorating property or a property in poor condition will sell for much cheaper.  But that doesn’t mean the property can’t be worked on and brought back to life. But even so, there are renovations you have to avoid. For example, a property that needs a new roof isn’t a good real estate wedge deal. But you can work if the property needs replacing kitchen cabinets or repainting. So even if you are looking at properties in terrible condition, not every property will work for a wedge deal.  Where To Find Good Properties To Wedge?  So that begs the question, where do you look for eager sellers or properties in terrible condition? Well, there are a few ways to go about it. Since real estate is local, you need to narrow your search and scout for sellers or properties in a targeted market.   But what does this mean? Put yourself in their position. If you are moving to another city and need to sell your house fast, where would you list it? The big real estate websites are a natural place to start. Websites such as Zillow, FSBO.com, Foreclosure.com, and Realtor.com should be some of your starting places. While many will tell you that MLS (multiple listing services) is the worst place to look, the opposite is true. You can find good deals through MLS. In addition, some eager sellers are more than willing to list their property below the market value if they find themselves in specific circumstances.  But probably the best way to look for real estate wedge deals is to contact for sale by owner houses. Unfortunately, FSBO houses aren’t as visible as houses sold by agents. Thus, FSBO sellers get significantly less exposure. However, most FSBO sellers want to save the 2-3.5% agent commission, so they might be more willing to sell under the market value. There are plenty of other ways to find real estate wedge deals. All you need to do is look hard enough. Conclusion To summarize, a wedge deal in real estate can be a good investment strategy if you do it right. To ensure you’re getting a good deal, look for house deals that require low-cost renovations and sell well under the market price.  FAQ What Is a Wedge Deal In Real Estate? A wedge deal in real estate is a property that sells for less than the potential market value. A wedge deal is often considered a real estate deal.  What Is Real Estate Wedging? Real estate wedging refers to a process of identifying properties worth less than the potential market value. It is a process where investors identify properties that can potentially resell for more significant profits after low-cost renovations.