NNN Commercial Real Estate Leases
Many real estate investors have heard about NNN leases but may not be sure of what exactly is involved in a triple net lease. At Calkain, we have extensive experience and expertise in assisting clients in finding the types of investments that will provide them with the most benefit. We currently have a wide-range of NNN lease properties available.
What Is an NNN Lease?
A triple net lease is one where the tenant is responsible for the majority of the property’s expenses instead of the property owner. These expenses include property taxes, insurance, repairs, and maintenance costs. This in addition to the amount of rent the tenant pays the property owner.
In traditional leases, property owners usually estimate the amount of the property’s expenses and then calculate those expenses into the amount of rent. Since the tenant is responsible for those costs in a triple net lease, the amount of rent that is charged is usually less than what it would be if the tenant was renting under a traditional lease. The property owner then uses that “extra” money to pay the taxes, insurance, and other expenses.
In an NNN lease, the property owner does not have to predict and calculate what the building’s future cost may be since these costs will be the tenant’s responsibility. Instead, the owner only has to determine a price for the monthly rent, leaving all financial risks for the property to the tenant. The property owner does not have to worry whether or not the city will enact a large property tax hike or whether the building will need a major and costly repair. This will all be up to the tenant to cover.
What Are the Risks?
Although there are relatively few risks to the property owner in triple net real estate property, there are still some factors they should consider. One of the main factors is the potential tenant’s creditworthiness, especially since most triple net leases are between the owner and a single tenant. Not only does the owner want to be assured that the tenant can pay the rent every month, but that they will also satisfy all of the other expenses they are responsible for.
This is why many property owners enter into triple net real estate leases with chain corporations and those that are publicly traded companies, making it much easier to verify what the tenant’s true credit ratings and bond issues are.
Some property owners also draw up what is referred to as an absolute or bondable triple net lease. This type of lease bars the tenant from seeking rent concessions or terminating the lease should the operating expenses for the property increase substantially.
Contact Our Office Today
If you would like to find out more information about how an NNN commercial real estate property could work for you and all the benefits these properties offer, contact Calkain. We can also go over all of the properties we currently have available. Call an NNN lease consultant today.