What is a triple net lease?
A triple net lease is a type of lease agreement, which assigns to the tenant the responsibility for all the costs relating to the property that is being leased, in addition to the rent fee (property taxes, insurance, maintenance, repair, and operations, utilities, etc.)
Also referred to as “NNN lease,” this type of lease generally requires the tenant to pay three types of costs:
– The net costs of common area maintenance and repairs
– The net real estate taxes
– The net building insurance
What are the benefits of a triple net lease?
Because of these additional costs going to the tenant, the rent fee tends to be lower in the case of a triple net lease. Moreover, NNN lease properties are usually well maintained, in order to remain attractive, by keeping the expected maintenance costs low for prospective tenants.
Investors also benefit from this type of lease, for several reasons. Since the tenant supports major property expenses, the operation costs remain low for the landlord. Because the rent fee is typically lower with a triple net lease, it is generally easier to find tenants. Moreover, this type of lease is considered to be lower-risk than others.
Common examples of such leases are in retail, for business like pharmacies, fast food franchises and auto stores.
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