Things You Need to Know About Leasing Triple Net Properties

Leasing triple net properties is a common structure in commercial real estate. In spite of its popularity, brokers often fail to grasp the whole concept of leasing triple net properties. In this article we have thoroughly discussed the common understandings involving triple net properties.

What is a Triple Net (NNN) Lease?

In a NNN lease structure, the tenant is bound to pay all operating costs. It is also referred to as a “turnkey” investment: the owner doesn’t have to bear any operating costs. To have a total understanding of NNN lease, it is important to know the spectrum of commercial real estate lease first.

The Spectrum of Commercial Real Estate Leases

Every real estate lease lies either on the absolute net lease side or absolute gross lease side of the spectrum. And an NNN lease falls in the absolute net lease category. However, for convenience, we usually refer to it as a triple net lease.

Triple Net Lease Properties

Always review the lease when dealing with triple net properties leasing. This is part of your due diligence process of evaluating leases. This is the only way out to get familiar with all terms and conditions. Labels like modified gross, triple net, and full service may often be in conflict with the penned terms.

What the NNN Lease Does Not Include

One common misconception about absolute net lease is that it covers all expenditures that involved with a property. But it is not always the case; there are few costs relevant to absolute net lease, which the tenant has no obligation to bear.

For instance, an NNN leasing doesn’t cover the accounting costs of reviewing or drafting documents. Though this seems to be nothing in comparison to the cost of purchasing a property, leasing triple net properties doesn’t cover them at all. Thus it would be wrong to think of every cost as absolute, though the name suggests so.

About the Author

Dwaine L. Clarke is the Founder and President of GCT Net Lease. GCT Net Lease is an investment real estate services firm exclusively focusing on Single and Mult-Tenant Net Lease Properties. The firm provides a full range of brokerage and advisory services nationwide to High Net worth Investors, Developers, REITs and Institutional Investment Funds. GCT Net Lease is headquartered in Windsor Connecticut. Dwaine is also a nationally recognized speaker and consultant. He is also the author of three best selling commercial real estate investing books. Mr. Clarke’s experience branches through close to over a decade of working with and for some of the nation’s top investors to purchase, underwrite, develop and manage millions of dollars in commercial investment real estate. For his case, he has not only assisted these investors, but also became a student of theirs. Through careful analysis he started to understand what these investment experts were doing, using top strategies to buy, manage and sell their investment properties for maximum profit. He especially took note of how these investors were leveraging their time and how they made their decisions without interfering with their personal or business lives. Mr. Clarke is also active in investing and creating real estate partnerships, providing a vehicle for high net-worth individuals to own income producing real estate.

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