You’ll hear the term net leased properties quite often if you plan to invest in real estate. The “net lease” is popular among commercial real estate investors because it allows them to pass along some of the costs involved in property ownership to those who are actually leasing the property.
Types of Net Leased Properties
Net
These are sometimes referred to as N lease or single net lease properties as well. In this type of lease agreement, the tenant is the one responsible for property taxes in addition to their regular (monthly, quarterly, etc.) rent payments.
Net-Net
In this type of lease arrangement, which may also be called an NN, lease or a double net lease, the lessee is required to pay property taxes and insurance on the building. The property owner maintains responsibility for generally maintenance and any or all necessary structural repairs. These are somewhat rare as most tenants that are willing to do this are equally willing to consider the next type of net lease.
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Net-Net-Net
You’ll hear this more commonly referred to as a triple net lease or an NNN lease. With this agreement, the tenant is responsible for property taxes, insurance on the property, and building maintenance. You will see this commonly used in freestanding buildings. Some big industry names use this lease structure.
The Upside of Owning Net Leased Properties
Long-term tenants
Most businesses that enter into a net lease arrangement intend to be there for a while. These are generally arrangements that are made for several years rather than a few months.
Confidence
Many of the businesses in question are solid names that you will recognize as industry leaders. This gives you confidence that they’ll not only take care of the building to protect their good name and image but also be able to live out the length of the contract.
Worry free
As far as property ownership is concerned, the NNN Lease is one of the greatest gifts you can give yourself. It removes 90% of the worry and aggravation that can accompany property ownership and/or management.
The Downside of Net Lease Ownership
Monthly income is lower
In the long term, this may not turn out to be the case but it will feel as though you aren’t bringing in as much money as you could be in other situations. It’s purely perception, but it matters to some people.
Less control
Some people like to be hands on with their investments. This is not one of those investments. You will have less control over what’s happening to your property as the tenant has that control and not you.
Risk
There are risks involved in any type of property investment, especially in the current economy. The risks with this type of investment are generally lower than other investment types but there is still some degree of risk involved.
The NNN Lease option is not for everyone but there are many who have found a comfortable home in the commercial real estate market through net leased property ownership.
Are you lost in a sea of questions concerning net leased and other commercial real estate investment options? Get answers today by talking to Stan Johnson: http://www.stanjohnsonco.com, an industry leader in commercial real estate who is ready to go to work for you today.
Article from articlesbase.com
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