Study: My Understanding of Properties

Understanding Investing in Triple Net Properties

As a type of lease agreement, a triple net lease involves the lessee as the one solely responsible for all related costs of the asset being leased which is additional to the rental fee applied under the lease. In a triple net lease, the 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 the commercial real estate, the standard names on the different sets of costs being passed to the tenant include single net lease, double net lease, triple net lease, bondable lease, and ground lease.

There is an increasing popularity of triple net leased properties most especially for investors who are searching for a steady income with a relatively lower risks as compared to other forms of investments. A triple net lease investment typically offer a portfolio of properties comprising of three or more high-grade commercial properties, wherein a single tenant fully lease the property, with current in-place cash flow. Shopping centers, office buildings, industrial parks or free-standing buildings operated by restaurant chains or banks are the commercial properties under the triple net lease, with a typical lease term agreement of ten to fifteen years in a built-in contractual rent escalation. There are a lot of benefits triple net investments can bring to an investor such as long-term and stable income with capital appreciation of the property. If you invest in a triple net property, you have freedom from management responsibilities, you can lease the property to a qualified tenant, you receive a stable cash flow, with attractive financing, and unique tax benefits which only real estate provides. Triple net lease real estate investments are appealing to part-time investors who are finding for guaranteed income without the risks of management responsibilities, and they are an attractive exit strategy for those with portfolios that are mature.

Like any other investment, there are a lot of factors you need to consider when structuring and valuing the deal. it is crucial to assess the quality or health of your tenant’s business, making sure that the tenant is capable of sustaining his business, with financial strength and 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. In a triple net investment, you are actually providing a capital to your tenant’s business, and the success has a direct bearing 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.