Posted by Robert TX on March 14, 2003 at 13:07:21:
While I have not done any Triple Net deals myself I have had many clients do them. The typical credit tenant triple net deal is a bond type deal wherein the owner is not necessarily trying to recieve an income stream but to have a particular amount of money at a future date.
Depending on the creditworthiness of the tenant a DCR of 1.01 is possible. This allows the owner to receive no real income over the primary lease term (and also put very little equity into the deal) but receive a pre-determined cashflow in the future when he retires or to sell the property at the end of the lease to fund a retirement.
These deal can work very well for the specific needs of a particular investor. However, many people are now buying post offices on this type of lease and setting themselves up for a significant setback in the future.
While a post office is leased by the federal government and you do not have to worry about the rent check these post office deals are typically in smaller towns and when the local postmaster wants a newer or bigger facility the owner is now left with an old post office that may not be readily convertable to another use at a reasonable rental rate.
Overall, triple net deals are meant to lock up a profit or to fund a future cash need.