Advantages of Triple Net (NNN) leased investment property:

  • Freedom from Management: tenants typically pay most if not all of the expenses.
  • Little to no management duties. You have more leisure time to relax or pursue other interests.
  • Availability: A good supply of investment properties but may not be close to home.
  • You can own higher quality investment property.
  • Triple net leases offer returns that allow buyers to project their income over time.

Typically my first question is, “what are you trying to accomplish with a NNN investment”. Secondly, based on today’s financial markets, we always look at the numbers to determine if they will allow you to reach your goals. There are several factors which affect returns. If sellers and buyers are realistic in expectations the return will be a steady investment as well as attract lenders even in today’s lending climate.

For more in-depth Pro’s and Con’s of NNN investments, please call 360-694-1031

1031 Exchanges


When property is sold, the seller pays tax on any gain or deducts a loss. Section 1031 of the tax code gives taxpayers an opportunity to defer any gain on the sale of qualified property.

For real estate, there are few restrictions on the types of property which can be exchanged. To defer taxation, an exchanger must exchange into "like kind" property. Like kind property has been broadly interpreted by the courts and now means virtually any kind of qualified real estate can be exchanged for any other real estate -- a ranch for a condo; a shopping center for an office building; an apartment complex for a TIC (Tenant-In-Common), land held as investment for improved property. The options are nearly endless.

Most exchanges are completed through an intermediary (such as 1031 Exchange Corporation). The IRS has published rules (safe harbor rules) for an intermediary assisted exchange. If these rules are followed, the IRS will not challenge the exchange. This safe harbor is a primary reason for using an intermediary to assist in the exchange. An intermediary can also provide expertise and guidance to insure that the exchange complies with IRS requirements.

Tax deferred exchanges have always been permitted under the tax code. However, until late 1979 an actual exchange between two more parties was required and the exchange had to be completed in one day. Beginning in the mid 1970s there were a series of court decisions striking down the IRS simultaneous exchange requirement. These court decisions created the delayed exchange which has evolved into the current exchange procedure.

Now, an actual exchange of property between two parties is not required. There is a six month period to complete an exchange; 45 days from the sale of your property to identify your exchange property and 135 days after that to close the exchange. When an intermediary is used, an exchanger may convey property (the relinquished property) directly to a purchaser with the proceeds of the sale paid directly to the intermediary. When the exchanger purchases replacement property, the intermediary pays the exchange funds to the seller of the replacement property. Title to the property usually does not pass through the intermediary.

Under Section 1031 tax on a gain is deferred, not forgiven. Eventually when the replacement property is sold, tax on the deferred gain must be paid unless other provisions of the tax code are used to completely eliminate the taxable gain.


Exchanges can be used to reduce taxes, diversify investments, increase or reallocate basis in property, change the location of investments, and as an integral part of an estate plan all of which can substantially increase your nest egg.


Section 1031 arguably provides the best tax shelter left in the tax code. Taxable gain can quite easily be deferred. When Section 1031 is combined with other sections of the Tax Code, it is possible to completely eliminate the deferred tax.

When the tax is deferred, a taxpayer has more funds available for re-investment. The government in effect makes an interest free loan to the taxpayer in the amount of the deferred tax.


If a taxpayer has fully or substantially depreciated property, Section 1031 can allow the taxpayer to increase basis by using the equity in a depreciated property to leverage the purchase of a more expensive property, thereby providing depreciable basis.


An exchange can help diversify assets. Property can be exchanged for any like kind property. For real property, like kind property includes any kind of real estate from a farm or ranch to a shopping center, to an office building. It also includes certain types of mineral interests, if the mineral interest is classified as an interest in real property under state law. Under Section 1031 a taxpayer could exchange out of a farm or ranch and into multiple properties including ranging from income property, to unimproved investment property, to a tenant in common interest in a large mineral interest. The possibilities are virtually endless.