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Watched a coworker lose his shirt on a triple net lease that looked good on paper
A guy I worked with in Phoenix signed a 10 year NNN lease on a retail space back in 2019. The numbers looked solid, rent was reasonable, tenant seemed stable. He thought he had it all figured out. Then COVID hit and the tenant just walked away. He was on the hook for property tax, insurance, and maintenance for 18 months before he could get someone else in there. Total cost to him was around $120,000 before he could find a new tenant at a lower rate. That experience made me realize you need to look past the cap rate and really vet who you are renting to. Has anyone else seen a triple net deal go sideways like that?
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emma_hart22d ago
...and that's exactly why I side-eye anyone who treats NNN leases like passive income. I've got a buddy who had a similar nightmare with a nail salon. Place was busy, looked great, owner seemed legit. Six months later, the owner was gone, and my buddy found out the guy was using the place as a front for something sketchy. Took him forever to get them out and the place needed new floors from all the chemicals. Hey @angela191, not wearing a shirt probably would have saved him from some of the dry cleaning bills, at least. He was basically paying to fix a crime scene while the real owner was nowhere to be found. It's wild how fast a "sure thing" can turn into a money pit.
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