Triple net lease real estate is popular among investors who want to create a stable income stream from regular, triple net rent in their portfolio. Triple net leases typically offer such an opportunity by providing long-term earning potential without the obligations that typically come along with being a landlord, such as taxes, insurance, or maintenance on the building to keep it in top operational order.
The terms of triple net leases can vary vastly though, which includes the rent amount you’ll earn as monthly income as the property owner. It’s important that you understand exactly how triple net rent can increase your earnings and know about the different factors that could limit or cap your potential on NNN properties you’re considering.
Here are four important aspects of triple net rent you should know as you’re looking at NNN properties for sale.
1. Triple Net Rent Amounts Are Often Lower Than Other Lease Types
In a triple net lease, the tenant is typically responsible for the following financial obligations, in addition to their monthly rent payment:
- Property Taxes
- Insurance Premiums
- Maintenance and Repairs
Since the tenant builds these responsibilities into their business expenses, the rent amount on triple net properties will usually be a bit lower than rent in other lease types where property expenses are wrapped up and covered in one monthly payment to the property owner.
2. Triple Net Rent Can Be Fixed or Increase During the Term of the Lease
Triple net leases often include a fixed rent amount that tenants agree to pay each month during the course of the lease. Triple net leases are usually long-term (over the period of 10 to 25 years on average) which means an investor can expect consistent income over a long period in this lease structure.
However, depending on the type of property and the desirability of the location, some triple net leases may also include rent increases at certain intervals in the lease term. While these types of triplet net leases are more rare, they mean increased revenue potential for the investor, over the period of the lease.
3. Triple Net Rent Can Provide Investors With a Reliable, Long-Term Revenue Stream
Triple net properties are attractive to investors because they offer a low-touch, low-risk (but solid return) investment opportunity. A property owner can still achieve consistent profits each month through triple net rent payments, and does not have to be involved as a landlord, fund repairs, or plan for property tax payments each year.
4. Triple Net Rent is Just One Factor to Consider in Your Triple Net Lease
Each lease is specific to the terms that have been negotiated, so it’s important to know those terms and how they translate into the triple net rent you can expect. Otherwise, you may find yourself with limited profits due to unexpected costs that come up, which you didn’t know fell under your obligations. For example, deals may require that you take out certain triple net insurance policies and cover those premiums, or it may be outlined that the property owner is responsible for maintenance on certain parts of the building such as the structure and roof. Knowing ahead of time what financial responsibilities you have as the property owner will help you determine the profitability of your investment and keep surprises from cutting into your investment down the line.
Working with a net lease advisor who knows market trends and understands the longevity of different types of net lease investment locations can be highly advantageous for helping you choose an investment that will give you the low risk, long-term, predictable profits you’re looking for in your NNN property.
Sands Investment Group is made up of experienced triple net lease advisors and specialized brokers who have extensive expertise in net lease real estate. We can advise you on the earning potential of triple net rent on a property to ensure you find the best deal for your portfolio, without any surprises or unexpected costs in the future. We have a proven track record of successfully closed deals and satisfied investors (in fact, we’re the fastest growing net lease investment company in America, and since 2010 have closed over 1,700 transactions worth $4 Billion, in 48 states.
Want to learn more about NNN properties for sale and speak with an industry expert about current triple net lease rent opportunities? Get in touch with an expert today by calling 844.4.SIG.NNN or sending us an email at info@SIGnnn.com.