Are you interested in investing in triple net lease properties but don’t know how to go about it? Perhaps, you read somewhere that investing in it is profitable and you want to give it a try. Well, the fact remains that this type of investment is worthwhile. However, before going into it, you need to get the right information about this leasing model.
What exactly is a triple net lease property investment and how important is it? Where is the best place to find these properties? Read further to discover what this investment is, including how to search for top-notch triple net lease properties for sale on Net Lease World.
What is Net Lease investment?
Today, there are different types of leases out there. However, at the highest level, there only exist two major types of commercial leases; gross leases and net leases. You can only achieve these two leases through the rent calculation method.
That said, a gross lease is a type of lease that’s both beneficial to the landlord and the tenant. As an investor, for any tenant to rent your property, they need to pay a set amount, periodically.
Unlike a gross lease, the price of a net lease is not fixed. Instead, the prices vary based on a couple of factors, such as market conditions, current conditions of the property, costs of maintenance, taxes, and insurance. Furthermore, you need to know that there are different types of net leases; they are:
- Single net leases
- Double net leases
- Triple net leases
- Bonded or absolute triple net leases
A single net lease will only require the tenant to pay the base rent for the investment property, including relevant taxes. The only difference between single net leases and double net leases is the inclusion of insurance fees for the latter.
A triple net lease or NNN lease requires the tenant to pay the base rent, including property taxes, insurance, and maintenance fees. This type of lease is the most popular out there. If you’re going for a bonded lease property investment, however, your tenants will have to pay the base rental amount as well as all other operating expenses.
Benefits of a triple net lease investment
As with other types of investments out there, you need to understand that investing in a triple net lease property also has its strengths and weaknesses.
There’s a reason why experts often advise investors against going for the gross lease option. In this case, the investor will be the only one to bear all the risks of all operating expenses, especially if it exceeds the projected amount. The tenant will be the one to take the risk if all operating expenses are less than the expected amount. With that, it’s safe to say that the gross lease option is a bet between the investor and the tenant.
With a triple net lease model, you can always mitigate or eliminate this risk. In this case, the tenant will be the one to pay for the base rent, as well as all operating expenses. As amazing as this leasing model is, however, it also has its risks.
One of the disadvantages of this model is that it could limit an investor’s earning potential, especially if the deal is long-term. What if the tenant defaults and the deal is long-term? Here, the investor stands to encounter a vacancy risk.
Where to find NNN properties for sales?
Today, only a few platforms are reliable for getting triple net lease properties for sale; Net Lease World is one of them. The right platform will provide you with all information regarding the investment property, including the NOI value, cap rate, lease rate, and location. It’ll also provide you with a manual search option to find properties that suit your budget.
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