Since NNN investments are such hot topics these days, many potential investors are considering, diversifying their portfolios to include these NNN commercial investment options.
For those looking for investments that come with lower risk while also delivering a steady monthly income with fixed increases, NNN investments might be a great fit. The added perk of owning real estate that can be easily passed on to the next buyer makes NNN real estate one of the most sought-after real estate investment options.
In this article, we will cover NNN investments and stock market investments, considering several criteria to see which is the more profitable choice.
NNN Investments vs. Stock Market: Returns
When it comes to investments, the returns are the primary consideration for investors. Well-thought-of NNN investments can transform into a steady cash infusion on a monthly basis, lead to building equity, and render dependable, growing returns with little to no responsibilities for the landlord.
NNN properties have lower risk factors and can have higher return rates of return, most commonly from 7 to 10%.
On the other hand, if you’ve been making stock market investments, you’ve probably become accustomed to an average 10-year ROI of 10-12%, but with inflation in mind, those numbers could go down by 2-3% annually,
Stock Market vs. NNN Investments: Volatility
One thing is for sure – the stock market can be quite volatile. What makes investing in the stock market different from making NNN investments is that the stock market runs on whatever the economic climate is at a given time. For instance, during the height of the COVID-19 pandemic, the stock market experienced some serious downturns, which resulted in swift changes in the value of the shares.
Now, the main difference between stock market investments and NNN investments is that, unlike the stock market, NNN investments tend to be more stable, but also less liquid.
NNN investments translate to a steady cash influx, which is something that can’t be said for stock market investments. As a legal, long-term contract with a clearly outlined rent increase, NNN leases help to ensure that the asset will persevere and not lose its value in the near future.
NNN Investments vs. Stock Market Investments: Tax Opportunities
When dealing with stock market investments, depending on the income and the duration of the ownership of the asset, the annual tax rate might reach 37%. Short-term capital gains from stocks that have been owned less than a year are usually taxed as regular income. In other words, stocks yield little to no tax opportunities.
On the other hand, NNN investments can render no tax conditioning. Plus, according to IRS’s 1031 code, there are tax depreciation opportunities for NNN investments, depending on the state where the property is located.
The Verdict: Which Is the More Profitable Investment?
The benefits, tax opportunities, returns, market volatility, and stability can make NNN investments a more lucrative choice for investors.
For those still on the fence, contact Brisky Net Lease for more information on how to make a smart NNN investment. You’ll gain insights into our current listings and browse through other investment opportunities like off-market opportunities and more.