Lighten Your Burden By Opting NNN Properties
When an investor does not want to bear the burden of the property because of their busy schedule and wants a relaxed life, then NNN lease is the best option you can go with. As we know that buying properties requires only money and managing them requires money as well as time.
So, when the investor gets tired of paying the wear and tear charges of the property, then they lease the property rather than selling it. ‘Triple-net lease’ is one of the best ways to engage the property. Therefore, before leasing out the property an investor must understand ‘triple-net lease’ investment.
‘NNN lease’ is a type of agreement under which an agreement is signed between the owner and tenant of the property. `NNN lease’ is also known as ‘triple-net lease’, under which tenant of the property has to pay all the property expenses along with the base rent. Here, NNN stands for net-net-net. As a result of which the owner of the property gets relief from the burden of paying the maintenance expense of the property. This is a very good type of investment which can be chosen by the investor for the steady flow of income from the property they have without spending anything. Under this the tenant is responsible for paying the expenses like the utilities, insurance, etc. The base rent of the property given under ‘NNN lease’ is low as compared with the property given on gross lease.
‘Net Lease’ is of three types depending upon what kind of property expenses the tenant is paying:
- Single-net Lease.
- Double-net Lease.
- Triple-net Lease.
In ‘single-net lease’ agreement the tenant pays the property tax or any one additional property expense along with the base rent.
In ‘double-net lease’, the tenant of the property pays the property taxes along with the insurance fee of the property.
In ‘Triple-net lease’, the tenant of the property is required to pay the property taxes, insurance, and maintenance cost of the property. These are also known as ‘three-nets’.
If we talk about the proper ‘triple-net lease’, then we talk about the investments that involve all the three ‘nets’ in the agreement. Some of the investors use the term ‘net-lease’ for both ‘triple-net lease’ and ‘double-net lease’ but there is a significant difference between both of the arrangements. Having the knowledge of different types of the net will make you do risk-free investment.
Advantages of ‘NNN lease’ investments:
- The advantage of ‘NNN lease’ investment is that all the major expenses of the property are covered by the tenants which makes the owner of the property mentally relaxed.
- NNN generates a steady flow of income for the property’s owner.
- For ‘NNN lease’ agreement the owner can defer the capital gain taxes in the 1031 exchange and reinvest the proceeds of the relinquished property to buy a new property.
- The ‘NNN lease’ investment is mostly preferred by the investor but there are few advantages for tenant also like: the base rent of the property under ‘NNN lease’ is comparatively less than the properties for gross rent.