What Is NNN (Triple Net) Investing?
NNN — or triple net — refers to a lease structure where the tenant pays not only rent but also property taxes, building insurance, and maintenance costs. The landlord receives a truly passive income stream with minimal management responsibility. For investors, NNN properties are often called “mailbox money” — you own the building, the tenant runs everything, and you collect a check every month.
Texas is one of the most active NNN investment markets in the country, with strong demand from 1031 exchange buyers, retirees, and passive investors seeking predictable income.
Common NNN Tenants in Texas
- Dollar General / Dollar Tree / Family Dollar
- AutoZone / O’Reilly Auto Parts / Advance Auto
- Walgreens / CVS
- Starbucks / Chick-fil-A / McDonald’s
- 7-Eleven / Wawa / Casey’s
- Taco Bell / Burger King / Wendy’s
- Sherwin-Williams / O’Reilly / Tractor Supply
- FedEx / UPS distribution
How NNN Properties Are Financed
NNN properties are among the most financeable commercial assets because lenders see the creditworthy tenant’s lease as near-guaranteed income. Key underwriting factors:
- Tenant credit rating: Investment-grade tenants (BBB- or better from S&P) get the best financing terms. Non-rated or local tenants get lower leverage
- Lease term remaining: Lenders typically want lease term to exceed loan term by 2+ years. A Dollar General with 12 years remaining finances much better than one with 3 years left
- Rent increases: Fixed bumps (10% every 5 years) or CPI-based increases protect income value over time
- Absolute NNN vs. modified gross: In absolute NNN, tenant pays everything. Modified gross means landlord retains some expense responsibility — lenders prefer absolute NNN
NNN Loan Terms in Texas
- Loan amounts: $500,000 to $20,000,000+
- LTV: 65–80% for investment-grade tenants with long lease terms
- Rates: Among the most competitive in commercial real estate — tied to 5 or 10-year Treasury
- Terms: 5 to 10-year fixed; 25–30 year amortization
- Non-recourse: Available on larger deals through CMBS
- DSCR: 1.20x to 1.25x typical
Cap Rates on Texas NNN Properties
NNN properties are priced by cap rate — the annual rent divided by the purchase price. Lower cap rates mean higher prices (more demand). Current Texas NNN cap rates by tenant type:
- Chick-fil-A, McDonald’s, Starbucks: 4.0–4.75% cap rate (premium pricing)
- Dollar General, AutoZone: 5.0–6.0% cap rate
- Walgreens, CVS (older leases): 5.5–7.0% cap rate
- Non-investment-grade tenants: 6.5–8.5% cap rate
Using a 1031 Exchange to Buy NNN in Texas
NNN properties are a top choice for 1031 exchange buyers because they offer passive income, low management burden, and straightforward financing. Timing is critical in a 1031 — you have 45 days to identify replacement property and 180 days to close. A bridge loan can help if your permanent financing isn’t ready in time.
Finance Your Texas NNN Investment
Whether you’re buying your first NNN deal or adding to a portfolio, we structure competitive financing for Texas NNN properties across all tenant types. Submit your deal and we’ll have a term sheet within 24 hours.
Apply Now — NNN Loan Pre-Qualification