Net Lease Properties

Over the years, net lease properties have been the most common solution for investors seeking passive income and properties without landlord headaches. Triple net lease refers to a type of commercial lease common to certain types of commercial properties. Net leases are an attractive option for 1031 exchangors not only because the tenant is responsible for insurance, taxes, and upkeep on the building, but also because they are typically associated with long-term leases and quality tenants. Additionally, many net leases also include a corporate guarantee. With corporate guaranteed leases, the tenant guarantees the rent payments for the duration of the lease regardless of occupancy. Some of the nuances of net lease properties are explained in further detail below.

Exclusive NNN Listings

Every day, Realtynet Advisors’ net lease team gets more than a hundred single-tenant NNN properties from our network of developers, owners, and other real estate brokers. Most of our NNN triple net leased properties (as well as NN double net lease properties for sale) are “pre-market” or “first day on the market.” This means that we’re able to provide you access to many properties before they reach the public market. Many “pocket listings” never make it popular listing sites and are sold before most agents have access to them. All properties on our list are analyzed by our team based on location, lease terms, tenant’s credit, and demographics. 

For those not very familiar with net leases,  commercial leases range from “absolute net leases” on on end of the spectrum to “absolute gross leases” on the other end. The distinction between the different types of leases is found in how many of the expenses and responsibilities fall on the tenant or the landlord. There are typically three variables in question in regards to net leases: insurance, taxes, and upkeep. In a triple net lease (NNN), these will all be the responsiblity of the tenant – leaving the owner/landlord with no responsibilities.

Tenant Responsibilities

N

NN

NNN

Property Tax

Property Tax

Property Tax

Property Tax

Insurance

Insurance

Insurance

Insurance

Building maintenance/upkeep

Building maintenance/upkeep

Building maintenance/upkeep

Building maintenance/upkeep

Single Net Lease

A commercial real estate lease where, in addition to rent, the tenant is required to pay property taxes. A single net lease is the first level of a pass through lease where taxes associated with the property are the responsibility of the tenant rather of the landlord. The property owner is responsible for the other operating expenses incurred of the property.

Double-Net Lease (NN)

A double net lease is where the tenant is responsible, in addition to rent, to pay both property taxes as well as insurance premiums for the property. Unlike a single net lease, which only requires the tenant to pay property taxes, a double net lease passes more expenses along in the form of insurance payments. As in a single net lease, the landlord is still responsible for property maintenance expenses.

Triple Net Lease (NNN)

In a triple net lease property, the tenant agrees to responsibility for payment of all the expenses involved in operating the property.  The structure of this type of lease requires the lessee to pay the net amount for three types of costs, including net real estate taxes on the leased asset, net building insurance and net common area maintenance. These expenses include all fixed and variable expenses, as well as any common area maintenance (CAM) fees. Properties with a NNN lease in place are obviously quite attractive since it leaves investors free of any ongoing responsibilities for the property.

Absolute NNN Lease

Some NNN leases are extremely favorable to property owners. Absolute leases require the tenant to pay for all expenses as well as every possible commercial real estate risk. For example, the absolute NNN lease would require the tenant to pay for rebuilding the construction in case of a hurricane or to pay rent even after a building has been declared inhabitable and is scheduled for demolition. This type of lease is relatively rare, and because of the extremely low investment risk, offers the lowest return.

Modified Net Lease

It isn’t uncommon to have modified net leases, under which tenants may have typical responsibilities of a NNN with the exclusion of specific structural repairs, exterior maintenance and repairs, etc. The most common modified NNN leases, require the owner is responsible only for structural repairs, roof repairs, or replacement of larger equipment such as an HVAC system, though this is typically only associated with brand new buildings.

Get Access to Exclusive Listings

Our team has a vast network of developers, owners, and other real estate brokers that provide us with access to hundreds of ``pre-listing`` properties. Contact us to get access to our NNN properties.