Triple Net Leases: A Simple Guide

Photo by Nastuh Abootalebi on Unsplash

What’s the big deal about NNN leases?

If you’re a tenant or landlord in the commercial real estate world, you’ve probably heard the term “triple net lease” or “NNN lease.” It’s a type of lease agreement that can be a bit different from the traditional leases you might be used to.

So, what does NNN actually mean?

Think of it like this: when you rent an apartment, you usually pay a monthly rent and that’s about it. But with a triple net lease, you’re also responsible for paying three additional costs:

1. Property taxes: These are the taxes on the building you’re leasing.
2. Building insurance: This covers the cost of insuring the building itself.
3. Common area maintenance (CAM): This includes the costs of maintaining the shared areas of the building, like the lobby, parking lot, and hallways.

Why would someone choose an NNN lease?

• Lower rent: Because tenants are taking on more responsibility, the base rent is often lower than in a traditional lease.
• More control: Tenants have more control over their expenses, as they can choose their own service providers for things like maintenance and insurance.
• Potential tax benefits: Depending on your situation, you might be able to deduct some of these expenses on your taxes.

Is an NNN lease right for you?

That depends on your circumstances. If you’re a tenant, you’ll need to weigh the benefits of lower rent against the added responsibility of managing these expenses. If you’re a landlord, an NNN lease can provide a steady stream of income, but it also means you’ll have less to worry about in terms of day-to-day management.

Want to learn more?

If you’re interested in learning more about triple net leases, or if you’re considering a commercial real estate transaction, I’d be happy to help. Feel free to reach out to me for a chat.