Triple Net Lease for SFH Rental Property

[Greg Moore]

QUESTION: Can a Triple Net Lease solve my dilemma?

BACK-STORY: I bought my in-laws’ home with a goal of using their equity to payoff debts, lower their expenses, and allow them to retire. To keep the expenses as low as possible, I had them sign a Lease for rent equal to my mortgage payment on the home— nothing more, nothing less. Also in the spirit of keeping expenses low, I don’t have professional property management. I’ve now owned the property for 10 months and I’m trying to decide what kind of rental agreement to put them in in a few months when they renew.

DILEMMA: Having owned the home for 20+ years they just make decisions like they still own it. Something breaks and they go out and buy what they want, and then call me to ask for reimbursement (eg incidentals they should pay, or big ticket items only they choose higher-end stuff I wouldn’t typically put in a rental). But then on the flip side, they want me to handle all the contractor stuff as if they are tenants. They call multiple times a week for property management issues that I don’t have the time for. It feels they are homeowners when they want to be, and tenants when they don’t want to be. I need to move things to higher ground with the right lease structure and bring clarity to what’s their responsibility and what’s mine. I’m wondering if a Triple Net Lease would solve this dilemma, but I’m not sure if this would be unusual for residential and what duration (years) makes sense? They are family, so I want to keep their costs low and make it good for them. But one way or another I need someone other than myself to be responsible for property management. (Note: the property is in another state than I am).

Thoughts?