With a global financial market that is known to be volatile at times, investors are often looking for a stable and predictable place to put their money. Similar to buying a bond, investing in triple net lease properties is one of the smartest and most reliable investment tools available today.
While we know this is a great opportunity for many investors, it can be confusing to those unfamiliar with commercial real estate or 1031 exchanges. Let our experts walk you through the basics of buying and selling net lease properties.
Also, visit our Properties page to see Upland’s list of available net lease investment opportunities. For additional questions, please Contact Us.
A triple net lease is a type of net lease in which the tenant (lessee) is typically responsible for all of the real estate taxes, building insurance, and maintenance associated with the use of the property, regardless of business performance. These costs are in addition to a set monthly rental fee. The lessee pays for three types of costs (taxes, insurance, maintenance), which is why this lease structure is called a triple net. (It is also referred to as “NNN lease” or “net net net lease”.)
Rent charged in a NNN lease is typically lower than in a standard lease because the tenant acquires other costs associated with the property. Investors considering purchasing a NNN property usually have specific objectives in mind that might not be met by typical real estate investments, including relief from management obligations, assured income, and preservation of capital. These needs can be met with triple net lease investments because the tenant is responsible for providing the property owner with a set net operating income over the course of the lease (which is often long term) regardless of the success of that particular business. Because the tenant is responsible for rent regardless of financial performance, the most desirable tenants are often backed by large corporations and rated by financial analysis firms such as Standard & Poor’s.