Get the Best of Commercial Real Estate With a Triple Net Lease Investment

If you’re looking to get involved in commercial real estate but don’t want to deal with the headaches or risk, then consider a triple net lease investment.  Many investors shy away from the lucrative world of commercial real estate because they associate it with tenant hassles, unforeseen expenses, and the fear of leverage working against them. 

Many real estate investors have been bogged down with common landlord concerns such as maximizing occupancy, handling expenses, and dealing with the headaches of property ownership.  Triple net lease investments minimize the work and risk associated with all of these concerns and simplify the task of being a landlord.

There are a variety of lease options available to use in the marketplace today.  Just like financing, sometimes we investors have to get creative with leases to maximize our investment or even make a deal happen.  Besides the normal type of lease you may be familiar with from leasing a car, house or apartment, there are a variety of leases that are common in commercial real estate and more advantageous to the investor; these are called net leases.   There are triple net (NNN), double net (NN) and single net (N) leases that pass some or all of the variable and fixed expenses of maintaining the property to the tenant, rather than the landlord. These leases put the burden of paying property expenses and rent on the tenant.

There are single net leases that insure that the tenant pays the real estate taxes in addition to their rent.  Double net leases have the tenant pay the rent, taxes and insurance.  The best lease for investors though is the triple net lease.  This magical gift from the lease fairy charges the tenant with paying rents, taxes, insurance and maintenance.  With this agreement in place the investor need not worry about paying for all of the expenses normally associated with ownership.

Some tenants may not like the idea of triple net lease investment.  Many cite that with this kind of agreement in place their costs can be hard to calculate or predict.  For example, if they are responsible for repairs and maintenance then their costs might balloon one month.  Unlike a regular leases where the tenant would always know their fixed rent costs, the triple net lease opens them up to variable costs they may not be able to predict.

Yet on the other hand a triple net lease investment does not only benefit the investor.  Tenants in a triple net lease will enjoy lower fixed rents.  The situation works best in their favor in a new building.  Here they will enjoy the lower rent as well as diminished maintenance and repair fees due to the building’s age.  

Of course, a triple net lease works best for us investors.  It frees you from many expenses that normally have to be shelled out of our income.  Along with the financial burden investors are freed from the duties of worrying about covering these costs, paying the bills etc.  All you need to do is make sure the tenants are paying on time and you are golden!