The triple net lease, otherwise known as triple ‘N,’ is one of the areas that many investors seem to be much interested in today. What is triple net lease? It is a type of lease agreement whereby the tenant is expected to pay rent and other three payments, which include insurance, tax, and maintenance. In as much as it looks like a good investment for any investor, it is imperative to do some due diligence before taking the plunge. For instance, you will need to consider the credit rating of the tenant, the lease structure, the terms, the location of the property, the rental rates in the area, and the length of the lease, to mention a few. That said, let us now look at some of the benefits of the triple net lease to both the tenant and the landlord;
Benefits of NNN to the landlord
1. Low risk
Let’s be honest; anyone who is looking into investing in real estate looks for investments that are low risk and with high returns on investment. And, the triple net lease might just be it. The fact that you still get your passive income without having to worry about the maintenance, tax, and insurance of the property means that it is a low-risk investment. So much so, most triple net leases have a long-term occupancy from about 5 plus years, meaning that you won’t have to look for new tenants every now and then. Companies such as SIGnnn.com Can help you close a deal fast by finding the right tenant.
2. Minimal property management
As a landlord, ideally, you should ensure that your property is well maintained at all times by taking up all the maintenance tasks. However, when it comes to this type of lease, your landlord duties are significantly reduced as the tenant is responsible for the maintenance of the property as well as ensuring that the taxes and insurance are paid in time. If you are a busy person or have a full-time job, this type of investment might work for you.
3. Stable source of income
As an investor in a triple net lease, you are guaranteed a consistent source of income for the agreed lease period. And as mentioned, most NNN lease period is from about 5 -10 years or more. You, therefore, will be receiving your rental income for the whole period, on a specific date, without worrying about the property maintenance, taxes, or insurance.
Benefits to the tenant
1. Good location
One of the main factors that is considered when it comes to NNN is the location of the property. The property has to be in a high-traffic area where businesses are guaranteed to make good sales. As a business owner, therefore, you can benefit from this as your business will be located in an area that is accessible and also has high traffic.
2. Low base price
Another advantage of this type of lease to the tenant is that it has a low base price. This is so because the tenant is the one responsible for the other types of payments which are the tax, property maintenance, and insurance.
3. Best for business growth
As a business, you may lose many customers if you often shift locations. By being in a triple lease property, you can be able to build your business, and its image as most customers will associate the particular location with your entity. In fact, even when expanding, most business owners will prefer maintaining the same location other than fully closing it down to move to another property.