NET
Property Taxes
NET
Maintenance
NET
Liability & Structure Insurance
Net Lease Tenant Responsibilities:
Maintenance
Tenant is responsible for all maintenance issues of repairs of walls, roof, structures, parking, HVAC, electric issues and more...
Property Taxes
Tenant is responsible for the burden of paying the annual property taxes
Insurance
Tenant is responsible for carrying and paying all liability related as well as structural, roof, and all other related insurances.
NN & NNN
Triple Net (NNN)
​
NNN stands for Triple Net Lease asset. A Triple Net Asset (NNN) is a commercial property, mostly built to suit the needs of a specific commercial tenant of retail or other services. With a NNN property, the tenant typically signs the lease before the site's development. The lease commences at the end of the building process when a certificate of occupancy is issued.
​
The NNN stands for Triple Nets:
-
property taxes,
-
maintenance
-
property & liability insurance
​
The situation of tenants are responsible under the lease agreement to pay all the above burdens of the lease, lead to the ownership of commercial real estate with no or limited landlord responsibilities during the duration of the lease. ​
The NNN leases are typically signed in advance and for extended periods that may vary from 10 to 25 years on the first term of the lease, and some of them can carry rent increases within the first term or extension periods.
​
Double Net (NN)
​
A double net lease is a rental agreement whereby the tenant agrees to cover most of the net expenses, leaving some landlord responsibilities towards maintenance. The most common maintenance responsibilities are roof, structure, and parking.
​
NNN Risk Balance
NNN assets hold the best balance of Risk vs. Yield. NNN Single Tenant Net Lease (STNL) needs minimal management; the corporate is responsible for all operating expenses. The real estate owners receive a rent check in the mail, which creates a very high level of passive income for the investor. This investment form is very attractive to all major lenders, including life insurance companies, banks, and private equity firms.
​
NNN leases are typically backed by investment-grade companies graded by Moody, Fitch, and S&P. The investment-grade status reflects the lender's appetite for these properties. The return on investment is relatively low compared to high-risk, high-yield assets such as multifamily and other NNN assets that are not backed up by substantial credit corporations such as franchisees.
​
Needless to say that high-risk high-yield properties such as the residential income-producing assets (houses and apartments) will always be at a higher risk because of the increased exposure rate to losses. Multy family assets may fall into bad management, high rate tenant turnover, and rising landlord liability legislation (rent increase caps, rent control, and rent stabilization).
NNN Corporate Lease - Lowest Risk
​
-
high credit-rated tenants
-
lenders high appetite to invest
-
no landlord responsibilities
-
stable tenets with backed up reserves
-
lower yields
-
100% passive income throughout the lease
NN Corporate Lease - Moderate Risk
​
-
mid to high credit rated tenants
-
lenders high appetite to invest
-
some landlord responsibilities
-
stable tenets with backed up reserves
-
higher yields
-
70% passive income throughout the lease
NNN & NN Franchisees - Highest Risk
​
-
low to non credit rated tenant
-
lenders spesific appetite to invest
-
non or some landlord responsibilities
-
stable tenets but no guarantees on reserves
-
highest yields
-
70 to 100% passive income throughout the lease