Triple Net Florida Leases in Commercial Real Estate
What is a Triple Net Lease?
A triple net Florida lease, or “NNN” lease, is a common lease structure for commercial real estate. The NNN variable in triple net (NNN) leases stands for net, net and net, which means that tenants are responsible for paying the taxes, insurance on the property, and any maintenance fees involved with the upkeep of the property. By having tenants pay for these variable expenses, landlords secure reliable and steady income from the lessee. Triple net Florida leases may be considered turnkey investments for landlords, since all operating expenses are paid for by the tenant.
The properties that have a triple net Florida lease are generally used for offices, retail spaces, and warehouses, but other property types may have a triple net lease as well – it is also normally rented by a single tenant. The rental agreement in this type of lease tends to have longer terms, which are usually a ten year commitment for the tenant.
Different Types of Commercial Real Estate Leases
Understanding the difference between a triple net Florida lease and other types of real estate leases is important when considering a property – especially if it is for commercial purposes. When leasing a property, it is essential to read the lease agreement thoroughly to determine if it meets your needs. Listed below are common lease agreements for commercial real estate, and how a triple net Florida lease differs from the others.
Net lease – A net lease involves a tenant paying for one or more of the variable expenses in a triple net Florida lease, so they pay for either taxes on the property, property insurance, or maintenance fees. In a net lease, the extra expenses that are to be paid by the tenant are stated expressly in the lease agreement.
Single net – In a single net lease, the taxes on the property is paid by the tenant.
Double net – A double net lease entails the tenant paying for the taxes on the property and the insurance on the property.
Triple net – As stated above, a triple net Florida lease means that a tenant is expected to pay the taxes, insurance, and maintenance on a building on top of the standard rent payments to the landlord.
The term triple net Florida lease is often thrown around for convenience, but it is often times misinterpreted by real estate agents. A triple net Florida lease falls between an absolute net lease and a gross net lease, making it a hybrid lease. Usually when people think of a triple net Florida lease, they think of an absolute net lease, but an absolute net lease entails a tenant paying for all of the expenses of a property, while a triple net Florida lease only requires the tenant to pay the taxes, insurance, and maintenance for the property.
Benefits of a Triple Net Florida Lease
Triple net Florida leases are beneficial for landlords wishing to invest in real estate properties because it generally provides them with a predictable and stable income. Since tenants are responsible for paying all taxes, insurance on the building, and maintenance fees, the landlord does not have to worry about these variable costs affecting the income received.
Give us a call at Calkain if you would like us to review potential contracts for triple net Florida leases to make sure your best interests as a landlord are protected.Triple Net Florida