“Passive” does not mean risk-free.
Net-lease properties can reduce day-to-day operating responsibility, but the investment may concentrate risk in one tenant, one lease and one location. Review tenant credit, guaranty, remaining term, rent escalations, options, assignment rights, landlord obligations, building condition and the property’s value if the current tenant leaves.
Exchange investors should also compare debt availability, closing speed and long-term residual real-estate value rather than choosing solely on current yield.
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