Triple Net Lease Investment

Triple Net Lease investments are maybe one of the most common types of commercial real estate investments. Also known as NNN lease, they are usually single-tenant retail properties where the investor is free from all the expenses, insurance, and maintenance costs.

NNN property deals often seem to be the perfect investment choice. This is so since these properties have no management responsibilities, and offer constant, stable cash-flows. What's more, they have easy financing and tax options. Solid Triple Net Lease, Single-tenant commercial properties often have an active long-term lease and a trustworthy tenant.

Since NNN properties offer numerous advantages, they are very appealing to investors who love secure income and little to no management responsibilities. But, even though these properties seem like an ideal option, investors should also pay attention to certain risks related to this type of investment.

Let us first start with the benefits.

Investors who want to invest in single-tenant commercial properties should focus on the following benefits.

• No Property Related Costs - In a Triple Net Lease, the investor is free from any responsibilities related to the property (such as taxes, insurance, operating expenses). That's why Triple Net Lease is different from any other type of lease agreement.
• Inevitable Income - The investor's cash flows are not affected by increases in the expenses since the tenant is responsible for all the expenses. The investor is collecting rent, thus he has regular cash flows. 
• Stability - Tenants in Triple Net Lease agreements often sign long leases of 10, 15 years. That's why these assets are considered very stable and secure. Usually, they can be found in areas with a lot of traffic and shopping malls, so it is a common case that huge, national and regional tenants sign this type of lease. 
• Financing options - Since the tenants are trustworthy and stable, banks do not hesitate to offer easy financing. Banks make a thorough analysis of future cash flows and determine which investors deserve a loan. 

Along with the benefits, Triple Net Leases also carry certain risks.

• Prevailing Rental Rates - Rental rates above the market value can be a drawback, but if a tenant vacates the property, the space will be occupied by the current market rate. If the rental rate is far above the market rate, bear in mind the credit of the tenant and the remaining lease term. 
• The Property Is Either Leased Or Not - Single-tenant commercial properties have only one tenant and therefore investors rely only on that tenant. So, the property is either fully leased or not. 

After looking at the benefits and the risks of Triple Net Investments, these properties are still appealing to investors who want steady income with minor liabilities. But, make sure to do your due diligence before investing. 

If you want to learn more about Triple Net investments, please read on.