The Only Truly Passive Real Estate Asset: Triple Net (NNN) Leases

You know recurring revenue. You've sold it, pitched it, and fought for it every quarter. But what if you could own it?  Triple Net Leases — known in the industry as NNN properties — are the commercial real estate equivalent of a contract that auto-renews, where the tenant handles the overhead and you collect the margin. No midnight maintenance calls. No chasing down repairs. Just predictable, long-term cash flow backed by national tenants with serious balance sheets.In this episode of The Capital Shift, NNN specialist Tom Rauen breaks down an asset class that most high earners have never considered — not because it's too complicated, but because nobody ever explained it in plain language.  If you've been stacking W-2 income and wondering how to make it work harder without adding another job to your plate, this conversation is for you. In this episode:What a Triple Net Lease actually is — in plain English Why the tenant pays taxes, insurance, and maintenance (and why they're okay with that) How to evaluate a deal like an investor, not a landlord The tenant creditworthiness question that separates good deals from great ones What high-income earners get wrong when they first enter this space 🔔 Subscribe and hit the bell — new episodes drop regularly on The Capital Shift.Show Notes: which is the overarching premise of the capital shift program, Tom Rowan, which is this notion of as you are more successful over the course of your career, you have more resources than you may have had when you first started. And so consequently as your resources grow and improve your thinking has to change from being a capital accumulator to being a capital deployer. As you are going through that metamorphosis, you actually are going through a bit of an identity change in the process. So hence the name the capital shift program. So welcome Tom. Happy to have you. >> Yes, glad to be here. So you want to tell all the stewards out there a little bit about Tom and your background and how we found ourselves on this happy program today? >> Yeah, for sure. So I found it 1800 t-shirts 20 years ago right out of college. And so that's been my primary job as a a small business owner, as an entrepreneur, uh growing that business now to 40 employees and you know pretty pretty full staff. And during that process, as we were continuing to build the business, we were running into a lot of problems entrepreneurs have is um we were making great money, but the tax man would come knocking out the door. So, I knew, you know, a lot of very wealthy people use real estate as a vehicle to create passive income. And the other part was like as a business owner, entrepreneur, like I wasn't sure what retirement looked like, whether that was an age or money amount or something. And I wanted to have that diversification on hand to you know kind of have a back stop I I guess you could say but then also to you know be earning some passive income um you know besides that and building some wealth in the background. So we started investing in commercial real estate primarily triple net lease focused and so that is big names uh so our tenants are like Starbucks and Arby's and Applebee's and national franchises with 10 to 25 year leases and the reason we focus on that asset class is because as like a full-time business owner you know no different than someone else that has a full-time job um I didn't have the time uh to dedicate to dealing with tenants and toilets and all this other stuff. And I'm not like a handy dude. So, I can't I'm I can fix maybe a few things, but I'm not really. So, I didn't want to like be fixing stuff and having to like, you know, deal with like I don't even like to fix stuff around our own house, let alone somebody else messing it up, right? So that's how we found this asset class and it's absolutely phenomenal asset class because I truly believe it's the only passive asset class that's out there. The rest of them are actually a lot more work. Um this is the only true one that you can set it and forget it and you know there's there's not all these other things going on. So that's that's why we love this asset class. It worked out really well because we could build our lifestyle around it, whether that's with work or with family or traveling and everything else. And as we look towards the future of, you know, retirement and things like that, this asset class still offers all that freedom and flexibility. >> Well, and unlike some of the other operators and the other classes that we've interviewed as a part of the program, there's weights and balances. you know, we're we're teaching the that are consuming this product how to learn the four different sort of measures that someone who's making a real estate investment is generally seeking. And you know, the fun part, Tom, like in many ways, you just described most of the people who are going to be watching the program because they don't have time for another job, just like you didn't have time for another job. They're already doing a lot of work for the thing that makes them the significant amount of money that their jobs afford them. And the idea of taking on a complete other set of tasks seems like the worst possible idea in the world of everything to most of these people because they're putting their heart and souls into what they're doing, you know, in solving problems for their clients. So the idea of then having to take on this added responsibility is just like okay so you've clearly most likely gotten these people's attention around like yeah that sounds exactly right. So break it down a little bit more about why you believe it is truly passive like and and when we say triple net like there may be people who doesn't even know what the heck we're talking about right so let's unpack it a bit for folks who maybe are a little uninitiated. >> Yeah this this got me super excited when you sent me this. So tax efficiency, equity leverage, cash flow creation, capital velocity. >> Yes. >> Now there's some other asset class where you might get one or two of those, >> right? >> I'll tell you what, I don't know the scoring system. Uh looks like a one, two, or three. >> Yeah, >> we're scoring like fives on all those, maybe even higher. Like off the charts. Uh >> all right. talk to the people like what what what makes this so unique that the scores would be so >> here's here's the unique part and I don't like I I kind of like to keep this hush hush because um but I'm going to let you guys in on a little secret. This is truly the best asset class. And the reason it's I call it a secret is because most people don't realize you can actually own these properties. You will never see a for sale sign in front of Starbucks or in front of McDonald's. Right? you're driving down the street, think of when you go to get coffee in the morning or any of the hightra areas in your city, you never see them for sale. So, that's why they're actually they're easy to get but hard to find because people don't know some of the inside tricks on getting these offmarket. They're not listed with, you know, traditional realtors and stuff like that. And typically these are owned by big private equity or big hedge funds and stuff like that. But they're also owned by investors just like you and me. So what these properties look like when I say passive and completely hands...