Commercial property owners need renters, and when they find renters they have the option of asking renters to sign a variety of lease types. In some cases, a company that wants to lease from your property may qualify for what is known as a “triple net” lease, and while those are only given out in specific circumstances, they are extremely valuable leases for commercial property investors.
The Term “Triple Net”
“Triple Net” is short for “Triple Net Lease” and refers to a lease where the lessee is willing to pay all three “nets.” These nets include:
- Property Tax (N) – This is any of the fees associated with owning the property on a month to month or yearly basis. All property taxes are covered by the lessee.
- Insurance (N) – Lessee is responsible for all insurance, essentially protecting the commercial property as if it was their own.
- Maintenance (N) – Anything the building needs to continue to operate must be paid for by the lessee. If something breaks or cracks, the property owner is not expected to respond to spend a dime out of pocket.
These “nets” are the additional payments that a property owner would normally have to make when someone rents their property.
In most rentals, the tenant covers none of the three “Nets” because those are considered the property owner’s responsibility, and the tenant is simply renting out space. But – depending on the industry – in some cases a property is valuable enough to the renter that a double net (property tax and insurance) or triple net lease is applicable, and when you can find someone that will cover those three “nets,” you are able to rent your property and be completely hands off while still generating revenue.
What Does Triple Net Mean to Banks?
Triple net leases are attractive to banks, provided that the lessee is a well-known company and the ability to pay off the lease is likely a guarantee. While there are always risks, certain lessees are proven investments, so banks look at these leases as an advantage to the property owner. They are even willing to grant low interest loans up to the amount of the property for property owners that would prefer to take all of the profit from the NNN lease in one lump sum, rather than wait it out over the course of years.
If you’re a property owner that is interested in receiving these types of lump payments for your triple net lease, or you want to learn more about properties that qualify for these types of leases, make sure you sign up with CRE Lender today. We’re the number one choice for connecting borrowers and property owners with the lenders that will turn their dreams into a reality. Sign up now to learn more.
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