It was finally over. The daily grind of building new features, fixing bugs, and reacting to the endless stream of customer feedback had reached its grand finale after 12 great years. I no longer was trading my time for money in the noble work of crafting great software. Don’t get me wrong, I absolutely love building innovative products alongside a passionate team, but now my daily ritual was skidding to a halt. The noise faded. I could make coffee the slow way, spend a long morning with my wife and kids and dream a bit bigger. What do I really care about? What kind of life do I want for my family over the next 10 years? What should my priorities really be? I could breathe deeper. I’m not kidding myself to think this wasn’t a privileged position to find myself in and I’m truly humbled by the difficult journey that was equal parts luck and hard-work.
Two things made this new life possible – building and selling two small but mighty software companies and investing along the way in quality industrial real estate. Building new software can be exciting, ever-changing, and risky at times, while investing in industrial real estate can, at best, be steady, predictable and downright boring in comparison. My industrial real estate investments have been a much-needed counterbalance to my penchant for the startup life. And recently, my passive income from real estate investing finally exceeded my family’s monthly expenses and I was suddenly financially free!
I’m now excited to share my latest endeavor, Coastland Partners – a boutique investment company that acquires high quality net-leased industrial real estate and brings other investors along for the wealth-building, passive-income-producing ride. I’ve become passionate about sharing the benefits of industrial real estate with other tech workers like myself while dispelling some of the common myths and hangups.
Why Net-Leased Industrial Real Estate?
There are literally hundreds of ways to invest in real estate and with so many routes to choose from, I needed a good map to start the journey. By defining my personal investing and lifestyle goals early, I began to formulate a strategy that would take me down the right path. Many investors I know have seen success in niches like single family homes, self storage, AirBnb rentals, and even mobile home investing to name a few. With so many paths, each person needs to get clear on their own goals and these will become the north star that guides them.
My personal goals were simple:
- Replace my monthly income as quickly as possible with real estate cashflow. – This means that I was looking for types of real estate that produced a healthy monthly cash return as well as a respectable overall return on my invested capital without much risk. This pointed me away from my local overpriced west-coast market and focused my attention on parts of the country with higher cash-flowing real estate, namely the Midwest and Southeast markets.
- Invest in real estate that’s simple and doesn’t take much energy or time to manage. – This eliminated many real estate strategies as they require full-time management and a very active approach. I shifted focus to the few niches in commercial real estate that were proven to be more “hands off”.
This led me down the path of discovering the most passive of all real estate niches, the single-tenant triple-net property. This is typically a freestanding building with a single business as the tenant – Think your local McDonalds, bank building, or the local tire shop. Why are these the most passive? Well, the tenant in this property typically signs a long-term 5-20 year “triple-net” lease, which means that in addition to paying the fixed monthly rent for years to come, they are also responsible to pay for property maintenance, insurance, and property taxes among other things. This means less unplanned expenses, and more predictability over time for the landlord.
Sounds great, but what’s the catch? Well, the main drawback for investors is that the returns can seem lower when compared with other property types and other “hands on” strategies, like home flipping, or the BRRR strategy, for example. But, there are plenty of ways to achieve higher than average returns on net-leased property investments and with these techniques, one can achieve competitive returns with less risk and with less energy. I have been convinced over the years that this niche offers the best returns for the least amount of effort and offers a welcome opportunity for the investor who prioritizes predictable monthly cashflow.
After looking at thousands of net-leased properties, I began my journey of negotiating and purchasing my first investment in the Midwest. This property came with a great long-term national tenant, a solid long-term lease agreement, and excellent monthly cash-on-cash returns. From this first property, I’ve expanded into multiple well-located industrial properties around the Midwest. I’m excited to share my experience with others who are curious to hear more about this great niche. Over the coming months, I’ll be sharing more content about net-leased industrial real estate investing, and more about my personal investing journey.
If you resonate with my goal of achieving financial freedom by replacing your active income with passive income from real estate, then I invite you to head over to Coastland Partners to learn more and stay tuned for future net-leased industrial investments that will be offered to qualified investors.
I’d love to connect with you if you’re interested in learning more about net-leased real estate in general or hearing about the Coastland Partners investment strategy. Stay tuned!
James Kappen is a seasoned entrepreneur who has started, grown, and sold two software companies over the past decade and is now is focused on helping others replace their active income with passive income through real estate investing.
James is also the managing partner a specialized sale leaseback company, saleleaseback.co, which helps operating businesses unlock equity in their real estate to fund their business growth.
Find James on Linkedin, or reach him at james (at) coastlandpartners.com