Hank Levine - Triple Net Lease

Hank Levine is a Real Estate Broker in Hendersonville, Tennessee specializing in Net Leased Commercial Real Estate and 1031 Exchanges. Throughout his career starting in the 60’s as a composer/arranger/conductor in Hollywood and Nashville he purchased Commercial Real Estate for his own portfolio. In the early 90’s, as the Music Industry underwent a complete transformation he decided to make Commercial Real Estate his full-time profession. He presents this subject not only as a Real Estate Professional but also from the investor’s point of view.

Is it to retire as a Millionaire by investing only in low-risk, management and labor-free, inflation-proof Commercial Properties in which your Tenants not only pay all taxes and insurance but, in addition, do all the maintenance? Would you like your sole duty each month to be to deposit the rent check?

Many of the investors who contact Hank regarding the prospective purchase of a Commercial Real Estate property currently own one or a number of residential rental houses. They are deeply involved in “Property Management”; They pay the taxes and insurance on their properties, collect rents, and are responsible for all maintenance, including plumbing, electrical, landscaping, roofing, general repairs, etc.

They may often do the work themselves if they have the necessary skills. This means that when they bought the property for investment purposes they also bought themselves a job. Some of them have hired a property management company to do all this for them in return for 10% of the gross rent. That’s 10% of their anticipated profit going to someone else. Often the management company is earning more on their investment than they are!

	Absolutely no management responsibilities!!
	Tenants pay all taxes and insurance!!
	Tenants doing all the maintenance!!
	Only two duties each month…. deposit the rent check and pay their mortgage!

The difference between the two is their monthly cash return. In addition, with their Tenant’s rent, which increases over time, plus their equity buildup which increases monthly, they can anticipate a return of fifteen to twenty percent on their cash down payment starting year one and increasing annually. Invariably their response is “But that sounds too good to be true!”

In Hank’s book, he will show you that it is absolutely true and is the safe, sure and easy way to separate “work” from “investment” and to become an “Armchair Real Estate Millionaire”.

In Hank's Net Lease Workshops for new investors or those unfamiliar with “Net Lease” he usually begins with an overview of the subject --- a brief definition of Triple Nets, what they are, why they are available, what kind of return to expect and, in general, how Net Lease works and differs from other real estate investments.

Although not especially complex, in order to fully understand this investment strategy there are many areas to cover in detail. This overview will give you a foundation on which to build a complete understanding of Net Lease investing and to decide if it is right for you.

Many large corporations prefer to lease rather than own their buildings for two reasons: they can only depreciate the cost of the building over 39 years and it remains as a long-term debt on their books. The monthly rent payment is written off as an annual expense on their tax return. Therefore they often have a building custom built and sell it with a long-term lease in place. The return to the investor/purchaser is excellent --- usually starting at around 15% to 20% and going up annually over the term of the lease because of periodic rent raises and the equity build-up.

The Leases are called “Triple Net (NNN)”, which means the Tenant is responsible for all repairs and maintenance --- including capital items (roof, structure, parking lot, landscaping, etc.). In addition, he pays all property taxes and insurance. The Landlord has no expense or responsibility.

Most investors will purchase a Net Leased property by leveraging their cash outlay --- putting twenty to twenty-five percent down and obtaining a long-term bank loan for the balance. The Tenant’s rent payment covers the mortgage note and in addition provides a steady, excellent monthly cash return.

Leases are usually from ten to twenty years with additional option periods. The NNN property is invariably a single-Tenant free-standing building. And since it is occupied by an “investment grade” company such as General Electric, Walgreen Drug, KFC, Circuit City, etc. there is little likelihood of default.

Because of the financial standing of the Tenant, long-term bank loans are usually obtained at a more favorable interest rate and lower down payment than with other kinds of commercial real estate investments. This allows the investor to acquire the property with

fewer dollars up front. In addition, the property’s potential rise in value over time because of its prime commercial location is a big plus.

Although most investors prefer properties that are not more than two to three hours driving time from their homes, they will have a much larger selection of currently available properties if they can include other cities in which they have business occasionally visit, or to which perhaps they would eventually like to retire.

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