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 expenses include insurance, property taxes, repair, maintenance, utilities, operations, and other items. Triple a net lease is also called as net-net-net (NNN) lease that relates 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 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 leased properties offer a lot of benefits to investors that include 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. 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.
As an investor, you know that like any other investment, there are many factors you need to take into consideration 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. You may contact us by checking our details in our website’s homepage if you are looking for triple net investment.