The 9 Most Unanswered Questions about Options

Triple Net Properties: Passive Income Real Estate Investment

A triple net lease refers to a leasing agreement which designates the lessee in which the tenant is primarily responsible for all the associated costs of the asset being leased, in addition to the rental fee which is applied to 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. In the commercial real estate, the standard names on the different sets of costs being passed 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. When it comes to triple net lease investments, they are generally offered as a portfolio of real estate properties consist of three or more high-grade commercial properties, wherein a single tenant lease it with an existing in-place cash flow. The different commercial properties may include shopping malls, office buildings, free-standing buildings operated by restaurant chains or banks, or industrial parks, with a lease term of ten to fifteen years. There are a lot of benefits triple net investments can bring to an investor such as long-term and stable income with capital appreciation of the property. Investing in a triple net property enables leasing the property to a quality tenant, freedom from management responsibilities, with attractive financing, stable cash flow, and unique tax benefits which only real estate provides. Triple net investments appeal to part-time investors who are looking for guaranteed income without management responsibilities, and it serve an attractive exit strategy for those with portfolios that are mature.

As with any other forms of investment, you know as an investor that there are associated risks, so you need to consider important things when structuring and valuing the deal. You need to assess the potential tenant to ensure the quality and health of its business model, as well as the financial strength or 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. In a triple net investment, you are actually providing a capital to your tenant’s business, 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.

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