Triple Net Investments

The Basics of a Triple Net Investments

Triple Net InvestmentsA triple net lease is an agreement used for commercial properties and may also be referred to as an NNN lease. The three n’s stand for net, net, net. It is important for tenants to understand the scope of their duties before agreeing to a triple net lease, as it comes along with greater responsibility than a gross or standard lease.

If you are considering whether a triple net lease is the right choice for your business future, you can rely on the guidance of a professional at Calkain. Here we have covered more information about what exactly a triple net lease entails, so potential tenants have a better idea of what they are getting into before committing.

Tenant Responsibilities
In a triple net lease, the tenant must pay for monthly rent as well as property costs. These maintenance costs can include upkeep, janitorial duties, water, parking lots, floors, common areas, and more. A tenant may be required to make payments for the following:

  • Building Repairs: Before getting into a triple net lease, the tenant should inquire further into potential costs for building repairs that are an immediate and future need. Being aware of these repairs can help the tenant prepare for such costs. A building in great condition will likely need fewer repairs than a building that is beginning to show wear and tear.
  • Property Taxes: Property that has been owned by the landlord for a multitude of years is likely to have a lower property tax. This can greatly benefit a tenant who could use a little break on property tax expenses. However, if the landlord sells the property and the triple net lease is passed on, the tenant could face an increase in their property tax.

The Appeal of a Triple Net Lease
Tenant and landlord can both appeal to the idea of an NNN lease agreement. Tenants of commercial property through a triple net lease can experience what it is like to run a business since the landlord sustains a more hands-off approach in his or her investment property. The skills a tenant practices during this lease term can benefit them if one day they want to own their own commercial building, as well as be responsible for its operation. Landlords like this arrangement because they have less responsibility when it comes to the everyday management of the business.

The Potential Disadvantages
A landlord who approves a tenant that has a lower credit score may be taking a risk if the tenant proves to not be able to handle paying all the costs associated with a triple net lease. However, the tenant may prove to be a great business person and the landlord is pleasantly surprised. A tenant who is not prepared for all the expenses may have difficulty keeping the business afloat.

Before deciding whether triple net investments are the best business decision for you, consult with a professional at Calkain. We hope to hear how we can make your business dreams become a reality.

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