NNN Investment FAQ

A triple net lease is a commercial lease structure where the tenant pays all three major operating expenses — property taxes, insurance, and maintenance — in addition to base rent. The landlord collects a predictable, passive rent check with minimal landlord responsibilities. An 'absolute NNN' lease goes one step further: the tenant is responsible for roof and structure too. That's the gold standard for truly passive ownership.

As of early 2026, cap rates for investment-grade NNN properties in Florida generally range from 5.5% to 7.0%, depending on tenant credit, lease term remaining, and market. Investment-grade tenants like Walgreens, CVS, Chick-fil-A, and Starbucks trade tighter (5.0%–6.25%). Stronger-credit dollar stores like Dollar General typically trade 5.75%–6.5%. Auto parts (AutoZone, O'Reilly) are 5.25%–6.25%. Non-investment-grade tenants or properties with shorter lease terms trade wider.

Most initial NNN lease terms run 10 to 25 years depending on tenant type. Pharmacies (Walgreens, CVS) commonly sign 20–25 year leases. QSR (Chick-fil-A, McDonald's, Starbucks) sign 15–20 years. Dollar General signs 15-year leases with 5 × 5-year options. Auto parts stores typically sign 15–20 years. Most leases include several 5-year tenant-option renewals beyond the initial term.

NNN property prices in Florida typically start around $1.5M (Dollar General, small dollar stores) and run to $10M+ for Walgreens, large Wawa, or multi-tenant properties. Most investors finance 60–75% of the purchase price, so equity required typically starts at $450K–$700K for entry-level deals. Many buyers use 1031 exchange proceeds from sold rental properties.

Investment-grade tenants are corporations with S&P credit ratings of BBB- or higher (Moody's: Baa3 or higher). Examples include Walgreens (BBB-), CVS Health (BBB), Chase Bank (A+), AutoZone (BBB), Chick-fil-A (private but treated as investment-grade equivalent). Lenders underwrite these tenants aggressively — often with lower rates and higher LTV. Non-IG tenants can still be excellent investments but require more tenant-specific credit analysis.

Yes — NNN properties are the single most popular replacement property for 1031 exchanges. Passive income, long-term leases, and creditworthy tenants make them ideal for investors trading out of active management-heavy real estate. You have 45 days from the sale of your relinquished property to identify replacement properties and 180 days to close. A qualified intermediary must be engaged before the sale of your original property.

Tenants typically have multiple 5-year renewal options at predetermined rent increases (often 10% per option period). Most corporate tenants exercise their options because the cost of relocating and opening a new store is high. If a tenant does not renew, you own a free-and-clear commercial property that can be re-leased, sold, or redeveloped — often at a significantly higher value than when purchased.

NNN is generally considered one of the lowest-risk commercial real estate investments — but it's not risk-free. Key risks: (1) tenant default (corporate bankruptcy or store closure), (2) cap rate expansion at exit (if interest rates rise), (3) single-tenant concentration. Mitigation: diversify across tenants and geographies, prioritize investment-grade tenants, buy properties in strong locations that would still have leasing value if the tenant leaves.

Usually, no. With a true NNN lease, the tenant handles all property-level operations, maintenance, taxes, and insurance. You collect a monthly rent check and file it away. The only real 'management' is annual tax return work and lease administration (noting renewal dates, rent bumps). This is why NNN is so attractive to passive investors.

Central Florida (Orlando metro, Lake Nona, Brevard County, Lake County) offers the best combination of population growth, tenant demand, and reasonable entry pricing. I-4 corridor markets (Orlando to Tampa) see the most institutional demand. Jacksonville and Southwest Florida (Cape Coral, Fort Myers) offer higher cap rates with strong growth. South Florida trades at the tightest cap rates but has institutional liquidity.