What Is A Triple N Lease?

What is the opposite of a triple net lease?

A gross lease is the exact opposite of a triple net lease.

Here, the landlord pays the expense of property taxes, property insurance and building maintenance.

The monthly rent charged the tenant is significantly higher to cover these additional costs..

Why would a commercial landlord insist on a triple net lease?

A triple net lease (triple-Net or NNN) is a lease agreement on a property where the tenant or lessee agrees to pay all real estate taxes, building insurance, and maintenance (the three “nets”) on the property in addition to any normal fees that are expected under the agreement (rent, utilities, etc.).

Why do a ground lease?

The ground lease defines who owns the land, and who owns the building, and improvements on the property. Many landlords use ground leases as a way to retain ownership of their property for planning reasons, to avoid any capital gains, and to generate income and revenue.

How is triple net lease calculated?

Triple net leases are calculated by adding the yearly taxes on the property and the insurance for the space together and dividing that amount by the building total rental square footage. The process of calculating a triple net lease is simplified when an entire building is leased to one tenant.

What are the main types of leases?

Summary. There are different types of leases, but the most common types are absolute net lease, triple net lease, modified gross lease, and full-service lease.

What is an absolute net lease?

What is an absolute net lease? In an absolute net lease, sometimes called a bondable lease, the tenant is responsible for rent and all other property related expenses, which includes roof and structure. This agreement completely relieves the property owner or investor of all financial obligations.

What are the three types of leases?

There are three categories of leases when it comes to commercial real estate: Gross Lease (also known as Full Service Lease), Net Lease, and Modified Gross Lease.

Who is responsible for the roof in a triple net lease?

As the triple net property owner (unless otherwise specified in the NNN lease), you’ll generally be responsible for maintaining and repairing these 3 main aspects of your building: Roof (repairs, maintenance, upgrades) Exterior Walls. Utility Repairs and Upkeep (for major things such as plumbing and electricity)

What is a double net lease?

A double net lease (also known as a ‘net-net’ or ‘NN’ lease) is a lease agreement in which the tenant is responsible for both property taxes and premiums for insuring the building.

Is a triple net lease good?

The Good: For the tenant, the triple net lease can be great. A tenant has more freedom with the structure and can better customize a space for use WITHOUT the capital investment of a purchase. … A triple net lease might have some sort of cap, but likely, a tenant would be forced to cover rising taxes and insurance rates.

What does $/ SF yr mean?

For office leases, this rate is often quoted on a square foot per year basis, meaning that a 10,000-SF tenant paying a base rate of $20/sf will be paying $200,000 a year in base rent. You will typically see this written out as $20 NNN + opex.

What is the difference between net and triple net lease?

A net lease is a real estate lease in which a tenant pays one or more additional expenses. … A triple net lease, also known as an NNN or net-net-net lease, requires the tenant to pay rent plus all three additional expenses.

Can you negotiate a triple net lease?

Absolutely not! There are many areas where a tenant can negotiate a NNN lease to make it more favorable. … If the tenant is taking on all responsibility and risk of the landlord’s overhead, then the tenant may be able to negotiate a more favorable base rental amount.

What are the 2 types of leases?

The two most common types of leases are operating leases and financing leases (also called capital leases). In order to differentiate between the two, one must consider how fully the risks and rewards associated with ownership of the asset have been transferred to the lessee from the lessor.

What are the major types of lease?

The three main types of leasing are finance leasing, operating leasing and contract hire.Finance leasing. … Operating leasing. … Contract hire.

What is NNN lease rate?

NNN stands for net, net, net. These pass through expenses of leasing are portions tenants or lessees pay in addition to the lease fee, or rent to the landlord or lessor. The NNN fees are property taxes, property insurance and common area maintenance. … That means the rent is $15 per foot per year plus the NNN.

Why would you want a triple net lease?

The triple net lease, also called NNN Leases, place responsibility with the tenant for three payments in addition to the rent. The tenant pays for building maintenance, insurance and property taxes. … Lower rent makes it easier to find tenants, so the landlord is less likely to have a vacant building.

What is included in a triple net lease?

Historically, triple net refers to leases where a tenant rents an entire freestanding commercial building and pays for all property expenses. The landlord “nets” the base rent, with no obligation to spend money on property operations.