What You Need to Know About the Triple Net Lease
The benefits of investing in triple net lease properties are fairly easy to see.
You get a regular income with very low maintenance requirements on your part.
You have the opportunity for some nice tax write-offs, yet receive all the benefits as the property appreciates in value.
The risks, too, are relatively straight forward.
After all, it's easy to understand that, although it's less likely, a business can default just like an individual lease-holder.
Even if they don't default, they could hit hard financial times and start neglecting their responsibilities, so you'll still need to keep an eye on the property to make sure the tenant is keeping up on all the expenses and maintenance jobs.
What isn't so easy to come to terms with, though, is all the legal jargon involved in the triple net lease itself.
First, let's get clear on the definition of a triple net lease.
The triple net lease, also called NNN for Net-Net-Net, is a lease designed such that the lessee is responsible for paying real estate taxes, building insurance, and building maintenance (the three "net" expenses) on the property.
This is in addition to regular expenses like utilities and grounds upkeep, which will also be paid by the tenant.
The triple net lease is different from a double net lease in that in the double net lease the property owner is still responsible for expenses involving the roof, foundation, and weight-bearing walls as well as certain utilities like heating.
If you're interested in finding out more about the details of how triple net leases are worded, one of the easiest ways to learn more is to grab a few sample lease forms from the net and read through them.
Just keep in mind that these samples should only be used to give you a general idea of what this type of lease is all about.
A lot of the free forms online contain inaccuracies or out-of-date information, which makes them unsuitable for use as-is.
What's more, because these leases involved a considerable investment over a long period of time, they're usually highly individualized to suit the needs of the property owner and the tenant.
Another good way to learn more about these investments is to browse through listings of triple net lease properties for sales.
Usually you'll be able to find these through real estate agents that specialize in commercial properties.
There are also databases online you can look through to get an idea of what's available in your area.
So that you don't get too off track, though, start off by looking at properties related to a field of business you already have some experience with.
While a triple net lease offers plenty of advantages to real estate investors with the capital to get started in this type of investment, there are also risks to consider.
Investing in net lease commercial properties isn't considered a high risk endeavor, but it's best to know all you can about these investments before you get started.
You get a regular income with very low maintenance requirements on your part.
You have the opportunity for some nice tax write-offs, yet receive all the benefits as the property appreciates in value.
The risks, too, are relatively straight forward.
After all, it's easy to understand that, although it's less likely, a business can default just like an individual lease-holder.
Even if they don't default, they could hit hard financial times and start neglecting their responsibilities, so you'll still need to keep an eye on the property to make sure the tenant is keeping up on all the expenses and maintenance jobs.
What isn't so easy to come to terms with, though, is all the legal jargon involved in the triple net lease itself.
First, let's get clear on the definition of a triple net lease.
The triple net lease, also called NNN for Net-Net-Net, is a lease designed such that the lessee is responsible for paying real estate taxes, building insurance, and building maintenance (the three "net" expenses) on the property.
This is in addition to regular expenses like utilities and grounds upkeep, which will also be paid by the tenant.
The triple net lease is different from a double net lease in that in the double net lease the property owner is still responsible for expenses involving the roof, foundation, and weight-bearing walls as well as certain utilities like heating.
If you're interested in finding out more about the details of how triple net leases are worded, one of the easiest ways to learn more is to grab a few sample lease forms from the net and read through them.
Just keep in mind that these samples should only be used to give you a general idea of what this type of lease is all about.
A lot of the free forms online contain inaccuracies or out-of-date information, which makes them unsuitable for use as-is.
What's more, because these leases involved a considerable investment over a long period of time, they're usually highly individualized to suit the needs of the property owner and the tenant.
Another good way to learn more about these investments is to browse through listings of triple net lease properties for sales.
Usually you'll be able to find these through real estate agents that specialize in commercial properties.
There are also databases online you can look through to get an idea of what's available in your area.
So that you don't get too off track, though, start off by looking at properties related to a field of business you already have some experience with.
While a triple net lease offers plenty of advantages to real estate investors with the capital to get started in this type of investment, there are also risks to consider.
Investing in net lease commercial properties isn't considered a high risk endeavor, but it's best to know all you can about these investments before you get started.
