Triple net lease real estate offers both investors and tenants many unique opportunities and benefits, but there are also limitations that don’t necessarily outweigh the rewards of this type of commercial lease, but are important items both parties must consider before deciding if a triple net lease is the best option to fulfilling their goals.
Investing in triple net lease real estate is a great way to diversify your portfolio, create an income stream, and build equity all at the same time. NNN properties typically have great locations with good traffic and strong, proximal businesses in the area. This lease type also comes with a long-term, qualified business tenant in place to ensure the longevity of your investment.
Triple net lease real estate is popular among investors who want to add a consistent revenue stream to their portfolio through monthly rent payments from tenants. A key advantage in a triple net lease is that a tenant usually takes on the majority of operating costs on the property, which makes it a low-risk and low-touch investment for a property owner, with stable income each month.
Triple net real estate is very beneficial to investors who are looking for a relatively low-risk investment (with little to no involvement as a landlord) that provides solid, predictable returns over the long-term.
NNN locations tied to established brands like Starbucks can be especially coveted in net lease real estate because they typically come with a recognizable brand, premium locations, and the potential for growing returns as the property owner. Read more
Net lease real estate is attractive for conservative investors who are looking for long-term profits and benefits from their investment in a property. In addition to net lease opportunities on existing structures, there is another avenue of revenue you can explore for your portfolio-ground leases. Read more
Net lease real estate offers an array of benefits for investors who are looking for a stable source of income, without the bulk of expenses and landlord duties that come along with property ownership. In a triple net lease, the tenant assumes the majority of expenses associated to the property (in addition to monthly triple net rent) where they’ll operate their business, such as:
- Maintenance and Repairs
An industrial gross lease (also called a modified gross lease in some markets) is a type of commercial real estate contract that is often used to create a mutually beneficial deal between the property owner and the tenant on an industrial or warehouse property. In an industrial gross lease, the tenant is responsible for some (but not all) of the operating expenses of the property, which they pay to the property owner in addition to their agreed upon monthly rent.
Triple net lease real estate is popular for investors who want to add a low-risk, low-touch property that brings in consistent revenue each month over a long-term period. In a triple net (or NNN) lease, 3 important financial responsibilities (each represented by “N”) are typically included and outlined it the contract:
- Insurance Premiums
- Maintenance, Repairs and Upkeep
But each deal is as unique as the property itself, so it’s important to know these three aspects of NNN expenses (from the standpoint of an investor and a tenant) to make sure you choose the best investment for your portfolio. Read more
Net lease real estate is rich in opportunity for both property owners (who can obtain a steady income steam on their investment) and the tenants (who occupy a space where they run their business). There are different variations of net lease deals, in which the tenant and the property owner will each have different financial responsibilities for the property. These various net lease deal types typically fall into one of three categories, which, in order of popularity, are: Triple Net (NNN) Lease, Double Net Lease, and Single Net Lease.
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.
A modified net lease is a deal variation or compromise that usually falls somewhere between the terms of a gross lease and a triple net lease. Each modified net lease contract is unique to the property, but there is generally a split of financial responsibilities between the property owner and the tenant to make the deal beneficial on both sides.
A modified gross lease can be best understood through comparison, as it represents a middle ground between a full-service gross lease and a triple net (NNN) lease.
In a gross lease, the property owner is financially responsible for the building, and covers all the expenses associated to its operation (including taxes, insurance, and maintenance). To help recoup some of these costs, the property owner builds them into the monthly rent amount that a tenant pays for use of the building. The property owner pays all of the expenses associated to the building, in exchange for a monthly, all-inclusive rent sum.
There are many vital aspects to successfully navigating commercial real estate listings and finding the best fit for your investment strategies. Aside from price and cap rates, a key factor to consider is the type of lease that may already be in place on a property (which you’ll inherit as the new property owner). Lease types vary, and the unique details within each deal can also be very different from one property to another. Read more
A triple net lease (or NNN lease) property is a special type of investment property that typically comes with a long-standing tenant agreement in place with terms that are favorable for both investors and tenants in the long-term.
Net lease capitalization rate (which is popularly shortened to simply, net lease cap rate) is a calculation used to measure the expected investment return on a net lease property investment. Cap rate is expressed as a percentage and is used to demonstrate how much of a return that an investor can expect on a net lease property, specifically over the first year of ownership.
As an investor you’re keen on finding the best investment, and to find that perfect deal you need to locate a property whose price fits into your goals. NNN for sale by owner listings can be tempting when you’re looking for a high return investment, and in some aspects of real estate can be great deals without all the fees that come along with working with a realty or investment advisory. If you’re dealing in cash, you can often get prices even lower and close faster dealing directly with an owner.
However, when it comes to triple net properties, the market and the variance in the lease deals in place on a property can present some unique intricacies that are hard to navigate (or easier to miss) when working the for sale by owner route.
Triple net lease real estate is popular among commercial investors who are looking for properties that are relatively low-risk but offer high returns without a substantial amount of management or oversight as a landlord.
Single tenant net lease properties can be ideal investors with these investment qualifications, because you’re dealing with one property, one long-term tenant (of anywhere from 10 to 25 years depending on the lease) and one set of agreement stipulations between you and the tenant. Multi-tenant net leases, however, tend to more complex since you’ll be dealing with multiple tenants who will potentially all have different terms (and timeframes) outlined in their leases.
The Capitalization Rate (or Cap Rate) is a term used heavily in the triple net lease real estate industry, and this calculation (expressed as a percentage) demonstrates the expected rate of return on a real estate investment. Cap rates are determined based on the net income a property is anticipated to generate and give investors an idea of how lucrative a triple net investment is compared to others on the market.