What Exactly Is A NNN Lease?

Article Written By: RebbecaMyers

Commercial property can frequently be riddled with pitfalls for people who aren't real sure about what they are doing. Using the NNN Lease is a sure fire way to reduce the stress of it all while giving yourself an income surge. The NNN, often called the Triple Net Lease, can very well become the foundation of your commercial real estate career. It is the key to earning any serious amount of money in the business.

Forget all about any of those real estate infomercials you have seen while flipping through the channels. Real investing requires knowledge about the marketplace and a little bit of hard work.

It will require some capital on your part in order to get your business off the ground and with anything in investing there will be some risks of losing that capitol. Taking the risk, however, can bring you great financial success and help you to break away from working nine to five every day. All that will be required on your part is some built up properties and before you know it a continuous stream of money will come flowing in your direction. While it will require some work, it doesn't require nearly as much as you think it will.

Now before you rush off with big ideas in your head, let's go over a few of the basics of the business first.

The majority of us have most likely encountered a standard lease agreement at some point or another. By signing it you agree to pay a certain amount of money in a certain amount of time. While you can still use this type of agreement with your commercial properties, you wont get the most out of it by doing so. NNN Leases are the most popular option for commercial properties for a good reason. They throw some of the property expense to the tenant to cover so you don't have to.

There is in fact a wide variety of leasing option you can choose from. The Single Net makes the property tax the responsibility of the tenant so you won't have to cover the cost. The Double Net includes the taxes as well as the insurance cost that the tenant must cover. The Triple Net gives both of these plus the maintenance fees and the rent to the tenant to be covered.

There are some advanced versions of the NNN Lease you can choose from as well. The bondable version, which is sometimes called an absolute NNN, gives responsibility of all risks to the tenant to deal with. One commonly included risk is one stating the tenant must cover all costs for rebuilding in the event of a disaster.

I know you are probably wondering how on Earth you would ever get a tenant to agree to such terms. The reason is because that the rent is a lot cheaper with these types of leases. If the lease is for a building that is brand new it is usually the best option because all other costs are low as well. Other times, a tenant will agree just because they need a location in that area. A great location in a shopping center, for example, will force some businesses to meet your demands just because they can generate a lot more business in that area.

As you can see, a NNN Lease is extremely useful when it comes to commercial investing. It gives you the income you have been looking for while eliminating almost all of the headache that would typically come with it. Your tenants pay all the expenses while you add just a little bit extra to the cost for your own profit.

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