The 5 Biggest Mistakes Investors Make When Evaluating Triple Net (NNN) Deals

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Triple Net (NNN) investments are often marketed as “hands-off,” “recession-resistant,” and “easy to manage.” While that’s mostly true, not all NNN deals are created equal—and the difference between a great buy and a painful one usually comes down to understanding the details that many investors overlook.

After reviewing hundreds of NNN assets, here are the five most common (and costly) mistakes investors make—and how to avoid them.

❌ Mistake #1: Focusing Only on the Cap Rate

A high cap rate can look attractive—but it often signals elevated risk.

What investors should ask instead:

• Why is the cap rate higher?

• Is the tenant’s credit weaker?

• Is the lease short?

• Is the location tertiary or low-growth?

Smart investors focus on risk-adjusted returns, not headline numbers.

❌ Mistake #2: Ignoring Lease Structure Nuances

Not all NNN leases are truly passive.

Common hidden responsibilities include:

• Roof & structure obligations

• Parking lot replacement

• Environmental or HVAC responsibilities

• Insurance deductibles

Before buying, verify whether the lease is:

• Absolute NNN: truly hands-off

• NNN: passive but with potential capital items

• NN (double net): more landlord involvement

This alone can swing your long-term yield dramatically.

❌ Mistake #3: Not Researching Tenant Strength Beyond the Brand

It’s easy to see a national name and assume safety.

But key questions include:

• Is the lease corporate or franchisee backed?

• How strong is the operator’s unit-level performance?

• What is the rent-to-sales ratio?

• Are there store closures nationwide?

A great brand does not guarantee a great guarantee.

❌ Mistake #4: Underestimating Location Risk

NNN buyers sometimes ignore real estate fundamentals because the cash flow looks strong.

But underlying dirt matters.

Consider:

• Traffic counts

• Population growth

• Income trends

• Competition in the market

• Visibility and ingress/egress

• Long-term viability of the trade area

Remember: you may own the cash flow today, but you own the real estate forever.

❌ Mistake #5: Overlooking Releasing or Renewal Risk

Even long-term leases eventually expire.

Before buying, you should know:

• How likely is the tenant to renew?

• What’s the tenant’s historical renewal rate?

• Could the next tenant pay the same rent?

• Is the property functional for multiple uses?

Investors get burned when they buy based solely on current income—without a clear view of “what happens next.”

✔️ The Best Investors Know This:

Great NNN investing is less about chasing yield and more about understanding:

• The tenant

• The real estate

• The lease

• The market

• The long-term downside

That’s how you generate the stable, predictable, passive income the NNN world is known for—without surprises.

📬 Final Thought

In a market where STNL and NNN demand continues to rise, the investors who win aren’t the ones who race to close; they’re the ones who ask smarter questions on the front end.

If you want help evaluating a potential NNN acquisition or need a second set of eyes on the lease, just reply. I’m happy to walk through the details with you.

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