What You Need to Know About Late-Stage Net Lease Investments

The late-stage real estate market can be a risky area to make investments. As supply begins to exceed demand in a hot market, investments that would normally be no-brainers run the risk of not generating adequate returns. For that reason, it’s important to watch the market like a hawk and consult with professional investment advisors in order to deduce the best opportunities.

As investment advisors ourselves, our team at Archer helps real estate investors such as yourself to find the most risk-free, low-maintenance opportunities, and our area of focus is in net lease investments. These are typically commercial properties with tenants that pay additional expenses such as property taxes. Generally speaking, net lease assets are valuable to investors because they reduce the amount of management that’s usually associated with property ownership. Net lease assets are easier to manage from a distance and can generate reliable returns.

Did you know that net lease assets are currently a bright spot in an otherwise late-stage real estate market? Indeed, even as other areas in the real estate market become more questionable investments, the net lease market is thriving, with signs of even more upward potential.

Foreign Capital

The US is the world’s largest property market, and as such, has attracted strong flows of foreign capital over the years. Normally, foreign acquisitions far exceed dispositions, but for the first time in seven years, foreign investors became net sellers. Indeed, cross-border investments in the US fell by 37.6% in 2019. Due to the current state of our market, many once-attractive investments have been more difficult to pull off, and we’re seeing a slight drop in foreign capital because of it.

It’s interesting, then, to see that amidst this dropoff, net lease investments continue to soar upward. While the overall real estate market has a growth rate of roughly 13%, net lease investments are growing at a pace of 17%, totaling about $33.4 billion in the first half of 2019.

There are those who would disregard these numbers due to the relatively small presence of net-leased assets in the overall real estate market. Ever since the financial crisis, they’ve only represented about 10% of the market, but this is no reason to write them off. Even if the market share isn’t enormous, why would you write off an investment opportunity that only seems to be growing upward?

The bottom line is that net leased properties are becoming more viable, and this is evidenced by the rising numbers of foreign capital. Despite the fact that international capital is on the downslope this year, it continues to go upwards in the realm of net leased property. This is due to the inherent viability of these investments for reliable returns, and the relative ease of managing them, perfect for overseas investors who aren’t able to make regular visits to the properties.

Jumping Into the Net Lease Real Estate Market

We mentioned above that, on average, net lease properties have made up about 10% of the overall real estate market over the years. But that number is an average — if you look at the present situation, it’s currently much higher. The transactions of single-tenant net lease properties alone made up about 15% of the total market in the US this year, the highest it’s been since 2013. The numbers make it clear — this is a market that’s on the rise, even while other markets are in their late stages.

At Archer Investors, we specialize in commercial real estate investment opportunities, and our major area of focus is helping real estate investors such as yourself to find viable properties for 1031 Delaware Statutory Trust (DST) exchanges. By reinvesting your capital into a commercial DST property instead of selling, you can defer capital gains taxes. This allows you to continue to reap the excellent returns of real estate investment, without the hefty fees you usually have to shell out from making a profit.

Commercial properties are typically net lease assets, and when you invest in a 1031 Exchange DST, you can make money from the property without having to engage in any of the management responsibilities. Whether you’re an international investor or someone who wants to kick back at home while your property earns you cash, the commercial properties we seek out at Archer Investors are great for DST exchanges. If you want to set yourself up for the future and leave your heirs in good hands, be sure to contact us today.