FAQ: What are the Benefits of NNN Real Estate?
A triple net lease, sometimes referred to as an NNN lease, is an option for tenants of a commercial property. The tenant is responsible for taking care of a expenses that would normally fall into the job duty of the landlord. While this sounds pretty straightforward, there are aspects of the agreement that a tenant should consider before signing on the dotted line. In this article, we have answered many common questions potential tenants of a triple net lease have about their role.
What does the NNN in triple net lease mean exactly?
By definition, the “NNN” in triple net lease means net, net, net. These three N’s represent the three costs a tenant would be responsible for paying. These expenses are listed as follows:
- Maintenance of property
- Real estate taxes
- Building insurance
The costs associated with these three N’s often include bills for upkeep, janitorial work, trash collection, fire sprinklers, lighting, water, parking lots, sewer, and more.
What should a potential tenant consider before signing an NNN real estate lease?
A tenant who is looking forward to being more independent must consider if he or she can handle the additional responsibilities. If an unexpected maintenance cost were to arise, the tenant would have to find a way to fix it. Of course, it may be possible to ask your landlord for advice or recommendations if you have a great relationship. However, it is up to the tenant to fix the issue.
If the tenant is paying for costs typically paid for by the landlord, what is the benefit?
The tenant is responsible for paying expenses that would otherwise be dealt with by the landlord. In exchange, the benefit to the tenant is that the rental costs for the building are likely to be significantly lower than what it would normally be.
What kind of experience will the tenant get if they agree to a triple net lease?
Tenants who want to get the feeling as if they were their very own business owner can benefit from a triple net lease. This is a great way to test out a person’s commercial knowledge and skills before becoming an entirely independent business owner. The landlord in an NNN real estate lease often takes on a more “hands-off” approach to management. The landlord has less stress from not having to handle those extra bills, while the tenant enjoys feeling more independent. It can truly be a win-win for both parties involved.
What rights does a person have as a tenant in NNN real estate lease?
The tenant does have a right to take action if he or she feels suspicious of their landlord over financial statements. The tenant can file an audit regarding certain changes or costs before submitting a payment. This is an option for tenants who feel something’s not quite right regarding statements to ensure the landlord did not commit an oversight on accident or intentionally.