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Understanding Investing in Triple Net Properties

A triple net lease pertains to a type of leasing agreement that is designating the lesser as the one solely responsible to pay all related costs of the asset being leased which is additional to the rental fee applied under the lease. The triple net lease expenses are categorized into “three nets” which include property taxes, maintenance, and insurance. Triple a net lease is also called as net-net-net (NNN) lease that relates to net real estate taxes, net common area maintenance, and net building insurance. In net lease, there are standard names in the commercial real estate which include single net lease, double net lease, triple net lease, bondable lease, and ground lease.

Triple net leased properties have become increasingly popular for those investors who are looking for a steady income with a relatively lower risks as compared to other forms of investments. Triple net lease investments are normally offering a portfolio of properties which consist of three or more high-grade commercial properties which are fully leased by a single tenant with current in-place cash flow. Commercial properties under the triple net lease may include shopping centers, office buildings, industrial parks or free-standing buildings operated by restaurant chains or banks, with a typical lease term agreement of ten to fifteen years in a built-in contractual rent escalation. Triple net leased properties offer a lot of benefits to investors that include long-term and stable income with capital appreciation of the property. Investing in a triple net property enables leasing the property to a quality tenant, freedom from management responsibilities, with attractive financing, stable cash flow, and unique tax benefits which only real estate provides. Triple net investments appeal to part-time investors who are looking for guaranteed income without management responsibilities, and it serve an attractive exit strategy for those with portfolios that are mature.

As with any other forms of investment, you know as an investor that there are associated risks, so you need to consider important things when structuring and valuing the deal. You need to assess the potential tenant to ensure the quality and health of its business model, as well as the financial strength or capability. In terms of tenant evaluation, it is important to consider the number of stores, operating margins, debt to equity ratios, outlook of the sector of their industry and stability of management. You are actually providing a real estate capital to the business of your tenant, and the success has a direct impact on the long-term success of your triple net investment. If you are looking for triple net investment, we are here to help you, you may contact us by checking our details in our website’s homepage.

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