What is a Triple Net lease? 

A "triple net lease" or NNN is a Lease where, in addition to rent, all expenses associated with the property such as property taxes, insurance, maintenance and operation charges are paid by the lessee.   An easy way to remember the three major tenant expense components of the triple net lease is to remember the acronym TIM, which stands for Taxes, Insurance, and Maintenance.  The tenant is responsible for the direct care of the building as well as paying directly all expenses for building operation such as property taxes, utilities, sewer, garbage removal, electricity, gas, etc.   

The absolute NNN lease is generally used in a single tenant building with a long-term lease.  It is a good alternative for leases with absentee owners who cannot manage the day-to-day operation of the building.  Because it does require proactive management by the tenant, it most commonly has a longer term than other leases. A NNN property is considered desirable by many real estate exchangers because it provides a minimum of management and maintenance concerns while providing a fixed rate of return from an established credit.     

Advantages of NNN:

1. 1031 NNN exchange properties can relieve owners from day-to-day management issues. 

2. A long-term lease to a corporate tenant with credit rating usually makes it easier to get favorable financing. 

3. Steady income-stream potential paid by a credit tenant.

Leasing the property gives the occupying companies the ability to control their physical environment without the financial commitment of ownership. By leasing the property, companies free up money for business expansion and more profitable investments that return a higher rate of return than real estate, namely their inventory and product lines. 

Two different types of buyers are fueling the demand for non-direct real estate. Existing property owners - particularly aging baby boomers - are taking advantage of record real estate prices to cash in on values and shift to less management-intensive investments. At the same time, disappointed Wall Street investors are turning to real estate in search of higher returns.  Typical triple-net lease tenants include national retail chains, particularly drugstores and fast-food outlets, although many corporations and regional companies also structure triple-net leases for office and industrial properties.

There are hundreds of quality NNN properties for sale across the country.  Fill out the Investor Questionaire and I'll be glad to start looking for the right property today.