Warning Sign 1: Lease Term Is Getting Short

Lease term is the single biggest driver of perceived certainty in a NNN deal — and the one most buyers underweight. Check the lease term and expiration date first. If you are within five years of expiration, you are approaching a decision point. The tenant controls whether they renew. You do not.

That does not make the deal bad. It means the price has to reflect that uncertainty.

I have seen investors build strong retirement portfolios buying properties with short remaining terms. They went in with a clear strategy: buy multiple properties at lower price points, hold through the decision window, and ride the wave rather than panic and sell off. That approach can work — but only when you understand exactly what you are doing and why.

The trap I see most often is the opposite: someone buys a deal with six years remaining because the cap rate looks attractive, holds for three years, and is now trying to sell a property with three years left on the lease. The buyer pool is small at that point. Pricing softens. You can lose money on the exit even if the income looked solid on day one.

Warning Sign 2: Thin Market, Limited Buyers

Liquidity means how easy it is to sell this asset to the next buyer. A property in a major market with a long remaining lease tends to attract multiple competing buyers. A property in a smaller or thinner trade area — a smaller town with limited retail density — can still be a solid investment, but it typically has a narrower buyer pool.

Fewer buyers means the market demands a discount. That discount shows up as a higher cap rate at acquisition and a higher cap rate when you sell. If you are not being compensated adequately for that at entry, you will feel it at exit.

Warning Sign 3: The Story Is Only About the Yield

Any time a deal is presented primarily around the cap rate — and the conversation does not quickly move to lease term, renewal options, location fundamentals, and exit strategy — slow down.

A good deal can be explained from more than one angle. What is the remaining term? What are the extension options? How long has the tenant been at this location? What does the trade area look like within three and five miles? If those answers are hard to get or vague when you ask, that is information.

Warning Sign 4: Lease Structure Has Friction

Most triple net leases are straightforward, but the basics are worth confirming before you go further. How much time is left on the primary term? Are there options to extend, and on what terms? Do rent increases occur, and when? Is it a true triple net where the landlord carries no responsibility for taxes, insurance, maintenance, the parking lot, and the roof?

You do not need to litigate every clause during initial screening. But you should know what you are buying and whether any structural nuances would give a future buyer pause — because that future buyer is the person you are eventually selling to.

Warning Sign 5: Bond Pricing on Non-Bond Risk

Some investors approach triple net the way they approach a bond — predictable income, low risk, set it and forget it. Triple net is not a bond. It is a real estate asset with a lease attached, and when something changes — term shortens, tenant struggles, market thins — it behaves like real estate.

If a deal is priced tightly but the lease term is short or the buyer pool is limited, you are paying bond pricing for non-bond risk. That is where investors get hurt — not from the income during the hold, but from the pricing at the exit.