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Triple Net Properties: Passive Income Real Estate Investment

As a type of lease agreement, a triple net lease involves the lessee as the one solely responsible for all related costs of the asset being leased which is additional to the rental fee applied under the lease. The triple net lease expenses are categorized into “three nets” which include property taxes, maintenance, and insurance. Triple net lease is also referred to as net-net-net (NNN) lease which pertains to net real estate taxes, net common area maintenance, and net building insurance. The standard names in the commercial real estate industry on the various sets of costs which are passed on to the tenant include single net lease, double net lease, triple net lease, bondable lease, and ground lease.

Triple net leased properties are becoming popular investment medium for investors who are seeking a steady income with a relatively lower risk. Triple net lease investments are normally offering a portfolio of properties which consist of three or more high-grade commercial properties which are fully leased by a single tenant with current in-place cash flow. Commercial properties under the triple net lease may include shopping centers, office buildings, industrial parks or free-standing buildings operated by restaurant chains or banks, 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. The management is free from management responsibilities, a long-term lease to a qualified tenant, attractive financing, stable cash flow, and unique tax benefits which only real estate provides. A triple net investment is appealing to a part-time investor who is looking for a guaranteed income without the risks of management responsibilities, and it is an attractive exit strategy for those with matured portfolios.

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. When it comes to evaluating your tenant, the different criteria you need to consider may include the operational margin, debt to equity ratios, a number of stores, the stability of management, and the outlook for the industry sector. You’re essentially providing a real estate capital to the business when you are leasing your property, and the success has a direct bearing on the long-term success of your triple net investment. If you are looking for triple net investment, we are here to help you, you may contact us by checking our details in our website’s homepage.