Net lease buyer guide
NNN Property Due Diligence Checklist
NNN property due diligence verifies the income, obligations and real estate behind a listing. Start with the executed lease and amendments, then reconcile tenant credit, expenses, physical condition and ownership records before committing to a purchase.
By Top Net Lease · Published
Read the lease and every amendment
Request the signed lease, every amendment, assignments, guaranties and notices. Build a dated schedule of base rent, increases, expiration, options and notice deadlines. Separate the firm remaining term from renewal options controlled by the tenant. An advertised long lease can have a much earlier termination right.
- Match the legal tenant name to the lease and rent payments.
- Identify early termination, co-tenancy, purchase and first-refusal rights.
- Have counsel review assignment, default, casualty and condemnation provisions.
- Request a tenant estoppel appropriate to the transaction; investigate inconsistencies rather than treating it as a substitute for the lease.
Verify the tenant and the guaranty
A national tenant brand does not prove that its parent company guarantees the rent. The tenant may be a local franchise company. Identify who owes rent, who guarantees it, what obligations are covered and whether the guaranty expires or can be released. Review financial information actually available for those entities; distinguish public parent financials from the rent-paying entity's financials.
- Ask for payment history and explanations of arrears or concessions.
- Review any available operating history without assuming sales reports are contractually required.
- Record missing financial information as a risk rather than substituting the brand's reputation.
Reconcile advertised NOI to property records
Compare the offering memorandum with rent receipts, operating statements, tax bills and insurance. Model landlord expenses that cannot be recovered and any limits on expense increases. Keep debt service and income tax separate from property NOI. Budget capital work and leasing costs separately when estimating cash available to you.
- Identify free rent, temporary reimbursements and seller credits.
- Check whether taxes may change after a sale with a local adviser.
- Compare current rent with supportable local market rent for a renewal or vacancy scenario.
Inspect the property and environmental history
Commission appropriate physical inspections instead of assuming the tenant's maintenance covenant guarantees good condition. Have an environmental professional evaluate historical uses and the appropriate Phase I assessment scope. EPA describes All Appropriate Inquiries as part of evaluating contamination and potential liability; a report alone does not establish every requirement for liability protection.
- Review roof, HVAC, structure, paving, drainage and deferred maintenance.
- Identify who must perform and pay for repairs under the actual lease.
- Investigate environmental findings and lender requirements before the diligence deadline.
Confirm title, access and the interest being purchased
Ask your title company and counsel to reconcile the deed, title commitment, survey and legal description. Check recorded easements, shared-access agreements, use restrictions and parking rights. Confirm whether you are buying land and improvements, a landlord's ground lease interest or a tenant's leasehold. Those are different investments even when the tenant brand is the same.
Track unresolved issues before closing
For each unresolved issue, record the document requested, responsible adviser, deadline and financial consequence. A missing roof report might require a repair estimate; an unclear guaranty requires legal clarification. Decide whether to proceed, renegotiate or stop while your contract rights remain available. A 1031 deadline should be coordinated with your intermediary, not used to skip diligence.
- Base case: contractual rent, verified expenses and supported financing.
- Downside case: vacancy, releasing costs, repairs and a lower replacement rent.
- Exit case: remaining firm term, likely buyer concerns and sale costs.
Sources and related research
Background reference: EPA: All Appropriate Inquiries. Apply general guidance to the actual documents with qualified advisers. This educational guide is not legal, tax or investment advice.
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Compare net lease properties by state or browse by tenant brand. For a specific listing, request the offering materials and lease details needed to verify its income and obligations.
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