In general, triple net leases are most commonly used for independent commercial buildings, usually with a single tenant, but can also be used for other types of real estate. Triple net leases generally have an initial duration of 10 years or more and have often introduced rent increases. If you want to learn more about Triple-Net-Leasing, we recommend you create a free account on TenantBase and speak to one of our local advisors. Your know-how is free for companies that want to rent land and they can help you every step of the way. A triple net rental agreement (Triple-Net or NNN) is a rental agreement for a property by which the tenant or the taker agrees to pay all property taxes, real estate insurance and maintenance payments (the three “networks”) on the property in addition to the normal costs to be provided under the agreement (rent, incidental costs etc.). In the case of such a tenancy agreement, the tenant or tenant is responsible for all costs related to the repair and maintenance of a common space (also known as CAM – Common Area Maintenance). CAM fees are usually negotiated in advance in the form of a dollar-set amount per square metre. Does this mean that a tenant has no place to negotiate more advantageous terms? That`s not true! There are many areas where a tenant can negotiate an NNN lease to make it cheaper. Triple Net Lease, also known as NNN leasing, is one of the most common commercial real estate leases.
Although this term is often used nowadays, it is often misinterpreted by many brokers. So if you`ve ever considered Triple Net Lease part of your investment portfolio, let`s clarify a few points. If the tenant`s premises are part of a larger property, the overhead costs are divided among the other tenants of the building, depending on the share of the square metre of the entire complex. The owner of the property is responsible for the stability of the building. The lease covers the obligations of the owner and the taker. As a general rule, triple Net rental is used for independent commercial real estate with only one tenant and the duration of the rental period is ten years or more, with many options for renovation. Many of our customers ask us, “What are the pros and cons of signing a Triple Net Lease?” While a triple net rental seems to favour homeowners, given the additional costs and tax inefficiency, this is not necessarily the case. If you trade well and use your benefits to achieve maximum effect, a triple net lease could be a financial benefit to your business. For example, if you rent an SF space of 2,000 USD with a basic SF rent of 24 USD and a triple net network of 8 USD per SF, the breakdown of payments would be as follows: as for other companies, Triple Net Investing carries some risk. No investment can guarantee 100% security and many people do not take risks into account.
Bankruptcy, high credit rates, termination of rental fees are some of the few. When maintenance costs are higher than expected, tenants of net triple leases often try to exit their leases or obtain leases. To avoid this, many homeowners prefer to be able to support a neat, glued rental. This is a kind of net triple lease that cannot be terminated before the expiry date. In addition, the rent cannot be changed for any reason, including unexpected and significant increases in incidental costs. In the case of a net triple lease, tenants must carry insurance on the property. In addition, they may have to pay all deductibles on the policy as well as uninsured damages. This increases the cost of the tenant`s land. But there are alternatives.
If the option is given, tenants may consider signing a gross rental agreement that calculates a flat rent. This amount covers the cost of the space and any additional costs associated with it.