Cash Flow: As the tenant pays rent, you receive that rent as income. Because the tenant is responsible for most (or all) expenses, you have little or no out-of-pocket expenses.
Inflation Hedge: Commercial real estate is an excellent hedge against inflation because rents typically increase along with the inflation rate. If you own a commercial building with triple net leases in place, you can reasonably expect this to be reflected in your rent payments over time.
Tax Benefits: You can depreciate the value of your commercial real estate by taking deductions for taxes, insurance, and operating expenses. However, remember that depreciation is a paper loss; it does not mean that your property will decrease in value over time.
What Is A Net Lease Investment Property & Why You Should Invest Today
Net lease investments are a type of real estate investment where the investor does not have to negotiate or manage the terms of the lease. Instead, the property manager takes care of any issues for you. This makes net lease investments very attractive for investors who do not have time to deal with the owner or tenants to make more money.
If you’re unfamiliar with NNN triple net lease obligations and are in need of some clarification, continue reading this post. It’s a comprehensive guide to all things triple net, including the 3 components that make up a nnn triple net lease, common mistakes landlords make when structuring their leases and why understanding leases are critical as a real estate investor.
A net lease investment property is a commercial real estate property that’s leased to a single tenant and requires the tenant to pay all the operating expenses associated with the property.
The term “net lease” is used to describe the type of lease agreement where one party (the landlord) leases his/her property to another party (the tenant). The tenant then pays rent in addition to other expenses associated with operating and maintaining the property.
What expenses are included in my rent?
The main expense that’s covered by the tenant is usually real estate taxes, although it could also include maintenance, insurance, and utilities. The amount of these expenses that are covered by the tenant will vary based on contract negotiations between the two parties.
In a gross lease, tenants pay a flat fee for their space, but in a net lease, they must pay an additional fee for real estate taxes and other operating costs each month. This means that if there is an increase in property taxes or other operating costs, then those costs will be passed onto tenants as well. If this happens over time, then rents may go up significantly without any new development being built nearby or demand increasing dramatically for office space in general.
Types Of Net Lease Investments?
If you’re considering an investment in net lease commercial property, it’s important to understand the different types of leases available. The different types of net leases are defined by who is responsible for paying the expenses associated with owning and maintaining commercial property. The three major types include:
Single Net Lease – With a single net lease, the tenant pays one primary expense, usually property taxes or insurance. This type of lease will include other operating expenses that the landlord is responsible for paying.
Double Net Lease – With a double net lease, the tenant pays two expenses: property taxes and insurance. This type of lease also includes other operating expenses that the landlord is responsible for paying. Sometimes this type of lease also includes roof repairs and upkeep in the responsibilities of the tenant.
Triple Net Lease – A triple net lease means that in addition to rent payments, tenants are also responsible for all real estate taxes, building insurance, and maintenance expenses associated with commercial property ownership. The “triple” refers to these three separate costs that are paid by the tenant rather than by the landlord/owner.
Why You Should Consider Investing in a Net Lease Property To Diversify Your Portfolio?
Investing in a net lease property is a great way to diversify your portfolio by adding a stable, long-term investment that has the potential for significant capital appreciation.
A net lease property is one in which the tenant pays a portion of the operating expenses on the building. These include maintenance, taxes, insurance, and other costs related to the upkeep of the property. This type of lease structure allows tenants to sign multi-year leases while at the same time providing investors with a steady stream of income.
There are many reasons why you should consider investing in a net lease property to diversify your portfolio:
• If you are looking to take advantage of many tax benefits associated with net lease properties, including depreciation and amortization deductions that can significantly reduce your overall income tax liability.
• You have an interest in long-term investments but don’t want to be locked out from selling if an opportunity arises where there is an opportunity for greater return on investment (ROI).
• You want immediate cash flow from your investment without having any tenant management responsibilities like collecting rent or providing maintenance services for tenants; this frees up time so you can focus on other aspects of running your business like marketing strategies or building relationships with customers.