NNN Real Estate derives its name from what is called a triple-net leased property. When an investor purchases NNN Real estate they essentially own a single-tenant free standing commercial property. The single tenant is locked into a long-term non-cancel able NNN net lease. The owner then has an investment property that is bringing a steady flow of secured income from a tenant responsible for the operation, taxes, capital improvements and maintenance of the property. The variable for investment risk is focused on the tenant, such as their credit rating and debt-income ratio. Other factors that determine a NNN properties risk are the property’s capitalization rate, terms of the loan and investor's cash flow.

You will reap quite a few benefits by having NNN properties as part of your real estate investment strategy. Firstly, the nature of the leases offers security so that you need not bother about vacancy rates and tenant turnover. You well not be required to pay management fees and capital improvement costs that will deplete your return on investment. You can buy these properties to participate in a 1031 NNN tax deferred exchange. 1031 NNN tax deferred exchanges increase the liquidity of your real estate investings will embolden you to become more aggressive with real estate investment. Finally, it allows continuous stream of income from the lease.1031 of the Internal Revenue Code is a complex bundle of requirements and deadlines.

The types of properties that legally qualify as 1031 NNN real estate exchange keeps changing as new court rulings, IRS rulings and amendments change. It is necessary to involve a trusted and reliable 1031 NNN Real Estate expert who can steer you through the vast array of properties, tenants and regulations so that you can effectively invest with maximum return on investment and minimal with NNN properties. Please note that the 1031 exchange permits real estate investors to utilize the IRS tax benefit to retain as much of their capital gains for reinvesting to build their real estate portfolio. 1031 of the Internal Revenue Code makes clear that if an investor follows the parameters of the code, then they can legally avoid paying capital gains and depreciation recapture taxes.

The parameters are strict and courts and the IRS are constantly introducing rulings on the 1031. It is imperative that a real estate investor fully understands the demands of 1031. It is critically important to know that 1031 deadlines are inviolable and if you miss them you will be subjected to capital gains taxes. It is advisable to begin searching for potential properties even before your relinquished property is sold so that you will not be trapped trying to meet the 45-day deadline. The 1031 Exchange requires the filing of the legal paperwork through a Qualified Intermediary. The Qualified Intermediary is in direct receipt of the proceeds from the sale of the relinquished investment property and transfers the money directly to the closing agent for the new replacement property.

As you search for a Qualified Intermediary, make sure they are well versed in the all types of 1031 Exchange transactions. The IRS stipulates that the potential 1031 exchange properties be identified within 45 days from the closing of the relinquished property. The 1031 Exchange transaction must be complete within 180 days from the close of escrow of the relinquished property. These time limits have to be honored at all costs. The IRS also stipulates that real estate investings title in the same form in the replacement property as they held in the relinquished property.

When attempting 1031 Exchange, make sure you consult with an experienced senior tax advisor who has a thorough understanding of all tax implications to guide you properly at every turn.