Define Triple Net Lease Agreement

Of course, not all commercial real estate contracts are considered “net.” There is also a gross lease in CRE, in which the owner of the land maintains full financial responsibility for the property during the lease. All commercial real estate leases are considered either in gross or net terms, with single, double and triple net leases being the distinctiveness of the tenant`s degree of liability (s). In general, triple net leases are most commonly used for independent commercial buildings, usually with a single tenant, but can also be used for other types of real estate. Triple net leases generally have an initial duration of 10 years or more and have often introduced rent increases. Owners and investors like triple net leasing because they create a steady and predictable revenue stream. As anyone who has owned a home for more than a few years can tell you, property taxes and property insurance can vary quite widely from year to year, and generally not in the favor of the owner. And maintenance is the most unpredictable effort of all. A property may not need major repairs for a long time, and suddenly you need a larger item like a new CCC unit. Many of our customers ask us, “What are the pros and cons of signing a Triple Net Lease?” While a triple net rental seems to favour homeowners, given the additional costs and tax inefficiency, this is not necessarily the case. If you trade well and use your benefits to achieve maximum effect, a triple net lease could be a financial benefit to your business.

A three-time net lease (or “nnn”) is a form of lease in which the tenant or tenant is responsible for the running costs of the property, including property taxes, property insurance and maintenance, in addition to the payment of rent and incidental costs. In general, multi-tenant properties prefer NNN leasing because rents tend to be lower. In addition, contractors responsible for non-life insurance, taxation and maintenance are encouraged to keep costs low. The term “net rental” is different from “gross rental.” In a net lease, the owner of the land receives the “net” rent after payment of the fees to be passed on to the tenants. In a gross tenancy agreement, the tenant pays a gross amount of rent that the lessor can use for withholding costs or in some other way, as the landlord sees fit. Gross rents generally have higher rental costs to cover some of these expenses in the rental line, as opposed to a net agreement. All three properties have become popular investment vehicles for investors looking for a relatively low-risk stable income. Three times net rental investments are usually a portfolio of real estate with three or more high quality commercial real estate, which are fully leased by a single tenant with an existing cash flow.