What to Look for in a Net Leased Tenant

The type of lease isn’t the only thing you should look for when you consider investing in a net leased asset. You should also take into consideration the strength of the tenant. Credit tenants are publicly traded companies and the most desirable from an investment standpoint. The credit worthiness of the tenant depends upon their ability to meet the obligations of the lease terms. If the tenant is a publicly traded company, their credit rating should be easy to determine by doing a little internet research (such as http://www.companysleuth.com). Corporate leases will always bring more security than a franchise, but with the financial security comes a lower return. Some franchisee’s have a corporate guaranty. Some have a personal guaranty. It’s important to evaluate each tenant on a case-by-case basis.

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