Pros and Cons of Triple Net (NNN) Properties for 1031 Exchanges

For over 20 years, our fee-only real estate advisory firm at SIFF Investment Services has guided investors like yourself through complex decisions like 1031 exchanges. As a consulting firm that doesn’t list or sell properties, we can provide truly unbiased analysis tailored to your specific situation.

One replacement property option that clients nearing or entering retirement often explore for a 1031 exchange is the triple net (NNN) commercial property leased to a tenant like Dollar General, Burger King, Starbucks or another national retailer/restaurant brand.

Here are some key pros and cons our team has observed with NNN properties:


  1. Passive income stream with little landlord obligation
  2. Long-term tenants and potential for value appreciation
  3. Relatively hands-off investment once acquired


  1. Higher price points that can limit cash flow
  2. Rental rates are fixed with limited upside
  3. Re-tenanting risk if major tenant vacates

Based on our experience, most NNN investors no longer want hands-on management responsibilities in retirement. Having a stable, consistent rental income stream from a branded tenant is crucial during this stage of life.

What Are Triple Net Properties?
In a NNN lease structure, the tenant like [Dollar General/Burger King/Starbucks] covers the property’s taxes, insurance, and maintenance – leaving you as the owner with minimal operating expenses beyond collecting rent.

The Potential Fit for Your 1031 Exchange
For investors like yourself seeking true passive income streams via a 1031 exchange, NNN properties can be a viable option – but they carry unique risks. We recommend conducting thorough due diligence on:

  • Branded tenant’s financials and long-term viability
  • Building condition and forecasted maintenance costs
  • Market cap rates and your ideal exit strategy

With the right NNN replacement property, you can defer taxes while diversifying into a relatively hands-off investment aligning with your retirement goals.

At SIFF Investment Services, our role is to provide candid, unbiased advice so you make fully informed decisions for your specific situation. Let’s discuss if exploring NNN properties could be a sensible path for your 1031 exchange.

About SIFF

For over 20 years SIFF – Strategic Wealth Advisors Specializing in Real Estate Investments – has provided unbiased, fee-based real estate consulting to disrupt outdated real estate models. We are not realtors or agents. Our role is to educate and empower clients by objectively outlining all options. Our fee-only structure allows us to put client interests first. By taking an unbiased, consultative approach, SIFF aims to help clients prosper through wise real estate investments.

Call: 1 (415) 601-1051 |