Triple-net basically means the three ‘nets’ to the landlord which means they don’t have any expenses, or any costs associated with the operations of the property, the tenant actually pays for all the repairs, all the maintenance, the insurance as well as all the property taxes so the landlord receives a net check of the rent. According to the triple-net policy, tenant holds the cost of maintaining the property, which offers a relatively low-risk and profitable investment opportunity.
Who is the Typical Buyer of Triple Net properties?
The demographics vary but lately it can be seen, people of old age are looking for more stabilized cash flow investment as opposed to a large appreciation, so they know what they’re getting into because a lot of the single tenant triple net leases tend to be a long-term lease anywhere from 15 – 20 years potentially up to 40 or 60years with options.
How to Value a Triple Net Investment?
The value depends on the following:
- Length of the Lease
- Location of the property
- And the tenant holds a big value.
- Long-Term Lease Agreements
Triple net lease agreements are usually structured to offer a long-term lease. This is beneficial because it eliminates the risk and losses of a property.
Tenants are responsible for nearly all the costs from maintenance, repair to insurance and taxes —a triple net lease agreement is a low-risk investment for an investor.
- Create Equity
Triple net leasing properties are included in investment portfolios as a low-risk, conservative strategy to create more equity.
- Business Footprint
A long-term lease can create a recognizable and long-lasting location for the tenant’s business.
- Tax Benefits
Tenants are responsible for paying taxes in a triple net lease, and they may build these expenses into their business expenses and achieve tax benefits. The use of triple-net leases remains relatively prevalent in the commercial real estate sector. It’s important to do the math on immediate and potential cost to be successful.