Triple Net Properties Definition for Real Estate Investors

With ongoing fluctuation in the market and economy, it’s no wonder more investors are turning to lower-risk investments like triple net properties. In fact, net leases in the industrial sector alone increased 75% in 2021 compared to 2019. 

Net leasing commercial real estate not only allows for flexibility, but also greater opportunity in booming markets – especially if you don’t live nearby. Whether you’re looking to build a commercial property or acquire a new one, furthering your understanding of net lease properties can help you be prepared for the right opportunity.

Table of Contents:

• What Is a Triple Net Lease?
• Triple Net Leases Pros and Cons
• Triple Net Lease Example
• Triple Net Properties FAQs

What Is a Triple Net Lease?

Triple net leases (or triple net properties) are agreements between a commercial building’s landlord and tenant where the tenant accepts responsibility for property taxes, building insurance, and maintenance expenses in addition to rent and utilities. In some cases, the tenant or lessee may also agree to pay for structural upkeep. 

A triple net investment only differs from a single or double net lease by the amount of responsibility held by the tenant. Compared to tenants in triple net properties, tenants are liable for fewer operating costs in double net investments, and a single net tenant is responsible for even fewer.

Triple Net Leases Pros and Cons

Triple net properties provide great flexibility for those in the market for a secure real estate investment. Despite the low risk they pose compared to other investments, if you’re not willing to deal with the drawbacks of triple net leases, they may not be the right option for you.

Understanding what you could lose from triple net properties is just as important as knowing what you could gain. Before jumping into the world of triple net properties, continue reading to gain a robust understanding of potential upsides and downsides.

Benefits of NNN Properties

Triple net properties come with a wide variety of benefits, each of which depend mainly on the investor’s goals and what can be negotiated with the tenant. Below are some of the most common benefits of NNN property:

• Fewer Responsibilities: Because of the way triple net leases are set up, the tenant pays for a good portion of the property’s operating costs, leaving you more time and money for other investment opportunities. 
• Greater Opportunities: Fewer landlord responsibilities means less time checking in on the property – allowing you to purchase properties in booming areas even if you don’t live close enough to check in every few weeks or more. 
• Predictability: Most triple net properties are under long-term leases with tenants you know will pay rent and other operating costs typically for 10 or more years. 
• Flexibility: Triple net leases are negotiable – if you’d rather the tenant pays a certain expense, while you handle another, it can be negotiated into the contract.

All of these benefits help to build a lucrative stream of income from real estate and diversify your investment portfolio. Utilizing NNN build to suit financing can further heighten your success by creating buildings that will attract your ideal tenant. Contact Revolution Realty Capital today to learn how we can provide up to 100% LTC financing for such commercial projects.