Are you interested in buying a triple net-lease property? Here is what to look for, in a lease, when you’re buying a property.
The main components for a triple net lease that we will discuss today are:
- Triple Net
- A double net
- Ground lease
With an absolute triple net property, the landlord doesn’t have to pay property taxes or insurance. The tenant pays for the maintenance of the property, property taxes, and each month you collect a check. This type of property is very passive and there’s minimal, if any, work to do.
With a double net property lease, it’s critical to read through the lease and review what the landlord is responsible for. The landlord can be responsible for utility lines, roofing issues or maintenance, the structure of the property, the parking lot, etc. All of these items can add up to ongoing expenses, so it is critical that the landlord reviews the lease and determine which items they are responsible for.
The ground lease is when an investor owns the land but not the building, so there is no building to depreciate, for tax purposes. When the investor owns the land, this type of lease is fairly passive, and the tenant takes care of the property taxes, insurance, maintenance, etc. However, you will only receive the residual income from the ground lease. Usually at the end of the primary lease term, if the tenant does not renew the option period, you receive the building by default. This means you receive a free building to re-lease to a new tenant.
We help investors maximize their returns on NNN properties. If you would like more information about triple-net properties, please contact us at info@NNNInvest.com.