The NNN lease, or otherwise known as a triple net lease, is commonly used in regards to commercial properties. For those who are looking to invest in such real estate, can consult with a professional at Calkain or more information. Triple net leases can be easily misinterpreted, leaving tenants feeling as though they were not fully informed about what exactly their responsibilities were. Here we have attempted to simplify the term NNN lease, so anyone new to the world of real estate can grasp a better understanding of this concept.
Definition of Net Lease
With a net lease, a landlord or lessor charges rent for the commercial building, plus standard costs for operation, upkeep, janitorial tasks, sewer, trash collection, water, parking lots and fire sprinklers.
Meaning of NNN
The NNN in triple net lease stands for net, net net. The NNN fees include taxes on the property, property insurance and maintenance. In addition to these fees, the tenant is responsible for paying the landlord or lessor a lease fee, or rent payment.
Triple Net Lease Property
By definition, a NNN lease is a lease structure where a tenant pays expenses for operating costs of the commercial property, in addition to other bills. It may seem as though the tenant is getting the short end of the stick, but the exchange can be that the tenant has more independence when it comes to operating the business.
Benefits of NNN Lease
An increasingly popular choice for leases is the NNN lease. This type of lease is usually a bit more landlord-friendly. Tenants of the commercial property are able to view operating expenses for the business in correlation to what they are being charged. Any cost savings are transferred to the tenant instead of the landlord. The monthly payment for rent of a NNN lease agreement is usually less than a gross lease, due to tenants being required to take on more responsibility for the property.
What to Keep in Mind
If you are interested in investing in a property with a NNN lease, do remember that net can vary and change yearly. The main reason for this fluctuation is due to taxes. Also, there is plenty of independence within a NNN lease. But, you will have to commit to upholding your additional duties for the building. If something were to break and go awry, you are the one who is required to fix it.
Rights as a Tenant
You have the right as a tenant to audit if you ever feel it is necessary. This means that you can submit an audit to your landlord about changes or costs, before you make your payment. This gives you a chance to review financial statements to confirm no errors or oversights were committed.
We are happy to discuss NNN leases with you at Calkain. A triple net lease can offer a variety of benefits, but there are some factors to consider before jumping in head first. Let us help offer guidance before you commit to a new investment.
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