I Replaced 20 Paychecks With One—Here's Why

One of the biggest misconceptions in commercial real estate I still see nowadays is “More Properties = More Wealth.” While this is true, I believe it is also wise to maximize profits while keeping maintenance at its lowest. I've encountered several multifamily owners who spent years building portfolios of 10, 20, even 50 units, and although they sounded successful on paper, many in reality, were dealing with constant issues such as turnover, rising costs in insurance, property taxes, etc., and the ongoing headache of managing tenants.

A client I recently worked with had roughly 20-30 rental units.

And the portfolio had appreciated significantly. The property was generating income, but at the same time, they were also generating stress. So, we looked into a different strategy. Rather than managing multiple residential units, my client explored selling his portfolio and completing a 1031 Exchange into a Single Tenant Net Lease (STNL) investment. The result? 20 units became 1 property, 20 rent checks became one, and sets of maintenance concerns became nonexistent.

We exchanged into a long-term leased STNL asset.

Occupied by a nationally recognized and growing QSR tenant. Because the NNN lease structure required the tenant to handle property taxes, insurance, and maintenance, ownership became dramatically more passive - steady income remained set and the management burden disappeared. This is one of the reasons STNL investments have become increasingly popular among landlords approaching retirement, owners relocating out of state, and investors simply looking to simplify their lives. However, STNL properties are not a perfect fit for everyone. Investors should carefully evaluate tenant credit, remaining lease terms, rent increases, location/demographics, and an exit strategy. For owners who have built substantial equity through active real estate management, STNL investments can provide a pathway from active landlord to passive investor.

The Finish Line

Sometimes the goal isn't always to own more properties, but to own fewer that work harder for you. For this client, turning 20 units into one paycheck wasn't about downsizing. It was about upgrading the quality of their income and reclaiming their time, which to some, may be the most valuable.

If you're considering ways to simplify ownership, improve cash flow, or explore a 1031 Exchange into a more passive investment, let's start a conversation.

Written by: Young Lee