Triple net leases are valuable commercial real estate tools. But they can also be a bit complicated. For property owners, a triple net lease is ideal. If you can find a company that qualifies and you have a property that can be leased by a single tenant, a triple net lease allows you to profit from the least amount of involvement.
But the idea behind triple net can still be hard to understand, so the following is a triple net lease example and how you would put one together.
Creating a Triple Net Lease
You own a single tenant property in a good location. This property was likely once some type of retail store, fast food company, or coffee shop, although technically any single tenant property will do. In your case, it is a spot that is perfect for a coffee shop.
You receive a phone call from a representative of Starbucks. This company wants to rent your property to open up a new location. You decide to work with them on a triple net lease. This lease may have a slightly lower rent than the property is worth, but Starbucks agrees to lease the property for 30 years and agree to pay the “Triple Nets:”
- All Maintenance and Upkeep
- Property Taxes and Fees
- Insurance and Other Monthly Protections
Starbucks agrees because they need your property and have no desire to purchase one themselves. It also ensures that they are not subjected to your own property management abilities, thus giving them more control over the property. You have some risk because you will only have one tenant, and that tenant is responsible for significant payments. But in general, because of Starbucks’ high credit score (A rating, currently), you can safely assume they will be able to make their payments.
Turning Your Lease Into a Loan
As you can see from this triple net lease example, these types of leases are highly advantageous to property owners, provided they choose the right tenant. If you have a lessee with a high credit rating, like Starbucks, you can also turn that lease into a lump sum of cash using a triple net loan.
Sign up with CRE Lender today to learn more about these types of lending options. We are the number one provider of triple net lease loan connections and we’re confident that you’ll get the best available rates for your loans. Sign up today.
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