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Triple Net Properties: Passive Income Real Estate Investment

A triple net lease refers to a leasing agreement which designates the lessee in which the tenant is primarily responsible for all the associated costs of the asset being leased, in addition to the rental fee which is applied to the lease. The expenses include insurance, property taxes, repair, maintenance, utilities, operations, and other items. Triple net lease is also commonly referred to as net-net-net (NNN) lease relating to net real estate taxes, net common area maintenance, and net building insurance. In net lease, there are standard names in the commercial real estate which include single net lease, double net lease, triple net lease, bondable lease, and ground lease.

Triple net leased properties have become increasingly popular for those investors who are looking 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. Triple net investments help investors gain 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 very important to assess the health and quality of a tenant’s business, ensuring the financial strength or financial 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. You are actually providing a real estate capital to the business of your tenant, and the success has a direct impact on the long-term success of your triple net investment. Just contact us by checking our details in our website’s homepage if you are looking for triple net investment.