Net lease investments are a type of investment where lessees are required to pay all expenses related to running or maintaining leased properties. These expenses include regular monthly bills, taxes, and property insurances. Net lease investments are sometimes referred to as closed end leases. There are three types of net lease investments: single, double (NN), and triple (NNN).
Single net lease
The least common type of net lease, a single net lease is also known as Net, or N lease. With this type of agreement, the tenant is the one responsible for paying property taxes and the base rent of the unit. The owner of the property is responsible for any other operating expenses.
Double net lease
In a double net lease, also known as a Net-Net or NN lease, the tenant is still responsible for paying the property tax and base rent. In addition to this, he or she is also responsible for paying for building insurance. The property owner only pays for expenses concerning structural repair and maintenance of the common area.
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Triple net lease
A triple net lease investment is the most popular kind of net lease. It’s also known as a Net-Net-Net or NNN lease. It holds the lessees or tenants responsible for all expenses associated with the operation, maintenance, and repair of the property plus the basic rent. You will usually encounter NNN leased property in malls and other commercial properties.
Double and triple net leases are far more popular than single net leases simply because property owners deal with less expenses in these two kinds of net leases. Double net leases are more popular when renting out residential properties because a triple net lease investment is too expensive for most people looking for a place to live in.
A net lease investment might appear to put lessees at a disadvantage, but it actually provides them with many benefits over other options. Lessees enjoy more flexible and independent operations. Also, since most property owners in the area are well established in the local community, there are often more business opportunities. People are more likely to go to the location, giving the lessees more potential customers. In residential properties, a net lease provides tenants with a cheaper alternative to buying a home.
For more details, visit us at www.netleasecapital.com.
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