Why investors use NNN investment to close their 1031 Exchange?
- Stability – Every investor seeks stability. NNN investment requires a long-term commitment from tenants that ensures a regular flow of income for investors until the lease ends. The majority of NNN tenants are big established companies, which means there is barely any risk of default.
- Increased cash flow – Exchanging an old investment property for a NNN property can surely increase the flow of income. In case your investment property is not generating as much revenue as it should be or if it has already depreciated, you can swap it with a NNN property using a 1031 exchange.
- Consolidation – Another advantage of using a 1031 exchange is that you can consolidate different investment properties. Consolidation can make your life easier as you don’t have to be at different locations for managing different properties.
- Diversification – Investors use 1031 exchange to diversify their investment portfolio as it gives them an opportunity to invest in properties of different grades or classes. Moreover, you can also use a 1031 exchange for geographical diversification.
- Management Relief – NNN investment removes the burden of property management from an investor’s shoulders. As the tenant is responsible for paying property expenses, NNN investors enjoy a regular flow of income without any liabilities.
- Asset preservation – Investors tend to preserve assets or properties for their heirs or relatives. 1031 exchange is a good way to keep your investment running for as long as you want. Swapping older properties with newer ones eliminates the possibilities of depreciation.