Triple Net Leases
Being a landlord can produce quite a headache, especially when
you consider all the maintenance it involves. Even worse, such
real estate investments can turn sour on a dime when the cost of
upkeep and unknown building expenses and repairs is factored in.
Triple net leases offer an enticing alternative. Not only can
they eliminate these aforementioned issues, but they can also
create a steady and secure cash flow for the investor.
The Triple Net Lease Definition
In a triple net lease, the tenant pays all the ongoing operating
expenses, property taxes, utilities, insurance premiums,
maintenance and repairs included. Meanwhile, the landlord gets
to collect monthly net rental income just as he or she would
with a traditional real estate investment. Such a lease usually
extends over the long term, with a financially strong corporate
entity guaranteeing a lease span of 10 to 25 years.
Why Triple Net Leases
Real estate investors usually consider triple net properties as
a very good investment option. That's because they are one of
the most liquid and secure real estate ventures available. Not
only do they usually sell quickly, but the tenants who opt for
such properties are normally high-qualified and creditworthy.
Most large enterprises prefer leasing property over owning it.
Why? Because by doing so, they save on real estate venue
capital. They then use that extra cash for other core business
activities. To compensate for their lack of ownership, they
usually associate the leased property with their corporate
identity and image. Therefore, they prove to be great tenants
who want their building to represent their ideal image. In
addition, they pay their taxes on time, they keep the property
in good shape, and they maintain the basic facilities well.
Moreover, they find it more viable to possess physical control
alone over their premises than to own it outright with their own
capital commitment. The commitment of both the landlord and the
quality lessee associated with these triple net properties
ensures the long-term appreciation and security of both parties.
Triple Net Leases as 1031 Investments
Triple net leases are also a very good option for those
individuals who are looking for a 1031 investment. Single-tenant
1031 net leased properties are a very practical and successful
investment option. A triple net lease via a 1031 will allow the
investor to realize even higher returns. How? By deferring his
or her taxes and thus increasing his or her overall internal
rate of return.
Triple net leased properties are usually single-tenant, retail,
or industrial properties. They are long-term leases that are
typically extended to corporate tenants. A few examples of such
corporate tenants are Blockbuster, Federal Express, Home Depot,
Family Dollar, Wal-Mart, AutoZone, and Applebee's. These tenants
use triple net leases for one very good reason: A net leased
property means ownership control is maintained without having to
bear the expenditure of up-front cash.
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Triple Net Leases and
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