What is a Triple-Net lease?

A triple-net or NNN (Net, Net, Net) lease is a single-tenant arrangement that requires the tenant to pay necessary property expenses along with the base rent. This kind of investment requires a long term commitment and may lock the tenant for a period of 10-15 years or even more. NNN Investment properties generally include retail, offices, industrial buildings, etc. Luckily for investors, a NNN lease requires the tenant to pay all three major property expenses – insurance fee, property taxes, and maintenance cost.

However, this isn’t always the case. Only in an absolute triple-net lease, the tenant is required to pay all three property expenses along with the base rent. Whereas, in a double-net lease or NN lease, the tenant is only required to pay two property expenses along with the base rent. Though these two property expenses could be any, they mostly include insurance fee and property taxes. Similarly, a single-net lease requires the tenant to pay just one property expense along with the base rent.

As you can see, the number of property expenses the tenant pays under a NNN lease agreement depends entirely upon the nature of the lease. Whether the tenant will be paying one, two or all property expenses, these are likely to be mentioned in your agreement.

Standard Lease Vs NNN Lease

Let’s take the case of a standard lease first. Suppose, you have a rental property that you want to put on lease for a few years.  After comparing different tenants, you finally decide to lease your property to one of them. Now, that tenant will pay you a flat price required to lease your property. Let’s say the amount is $1K. Therefore, as soon as the lease commences, you’ll start receiving $1K every month.  Now, let’s calculate the deductions. Being the property owner, you’re also responsible for managing your property and paying all necessary property expenses. Let’s say you spent $2400 on property taxes (annually), $1k on insurance and another $1K on the maintenance of your property. After 12 months, your earning would be –

Rent = $(12*1000) = $12,000

Property expenses = $(2400+1000+1000) = $4400

Net income = Rent – Property Expenses
                      = $ (12,000-4400)
                      = $ 7600

Here, your annual net income is $7600, and you’ve spent $4400 on the maintenance and other property expenses.

Now, consider the same example but for a NNN lease. Since it’s a NNN lease, the base rent is likely to be on the lower side. Let’s say you’re getting $800 every month as rent and the property expenses remain the same. Therefore, your income after 12 months would be –

Rent = $(12*800) = $9600

Property expenses = $(2400+1000+1000) = $4400          

Since in a NNN lease, the tenant is required to pay the property expenses, it won’t get deducted from your earnings. So, your annual net income would be –    

 Net income = Rent
                       = $(800*12)
                       = $9600

As you can see, even though the base rent in a NNN lease is slightly less than that in a standard lease, NNN investors receive more income than anyone who leases their property under a standard lease.

Benefits of investing in NNN properties through triplenetproperty.com

  • Get tenants like Walgreens, Starbucks, CVS, etc.
  • Largest selection of Net Lease Properties
  • Predictable monthly cash flow
  • 5-8% cash-on-cash yields
  • Non-recourse financing at low rates
  • Credit-tenants with long-term leases, and many more.
For consultation and assistance regarding NNN properties, you can call 888-993-2835 or Click here to contact one of our Advisors to know more about NNN properties. You can also email us at info@triplenetproperty.com.

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