A triple net lease, also referred to as an NNN lease, is quite different than a traditional lease. With this type of lease, a tenant is responsible for paying for property taxes, building maintenance and insurance, in addition to the rent. While this may sound like a lot of extra expenses, an NNN lease can provide several benefits to tenants and landlords. Let’s take a closer look at these advantages:
Triple net tenants have more control of the property they live in. For example, if a tenant thinks the plumbing system or roof needs repaired, he or she does not have to contact the landlord and wait for him or her to call a professional to fix it. The tenant has the power to hire anyone they want to repair various systems and appliances in the property they live in. This can make a tenant feel like an actual owner of a property, instead of just a traditional tenant.
One of the biggest advantages of a triple net lease is lower-than-market rent. Because tenants are responsible for paying for the property taxes, insurance and building maintenance, they may get charged lower rent in return.
Landlords who own a single tenant property with an NNN lease can enjoy the luxury of minimal management. With the tenant taking care of property taxes, insurance and maintenance, there is not much left for a landlord to take care of. In fact, the landlord is just responsible for bookkeeping, tax returns, and deciding when to refinance the property. This can be very beneficial for landlords with full-time jobs because they do not have to worry about taking care of typical maintenance duties.
Stable cash flow
Another attractive quality of investing in a single tenant property with a triple net lease is stable cash flow. New leases typically span at least 10 years, so landlords are guaranteed a positive cash flow for quite a while. Landlords don’t have to worry about finding new tenants every years and having their buildings vacant for months at a time.
Low-entry price point
Single tenant properties are also typically more affordable than other types of properties. In fact, the prices for these properties can start as low as $500,000. An investor can buy a property at an affordable rate, obtain a tenant and start earning the money he or she invested back fairly quickly.
More financing options
With most real estate properties, loans are written against the value of the property. Single tenant properties, on the other hand, are a little different. Because a single tenant property is backed up the tenant’s credit as much as the value of the property, investors have more financing options available to them.
As you can see, a triple net lease provides benefits for both landlords and tenants. If you are interested in a triple neat lease, or if you would like more information about these types of leases, contact Calkain at (703) 787-4714.What are the benefits of a triple net lease?