If you are reading this article, you’re likely interested in triple net lease properties. As with any new investment opportunity, it is important to know how to shop smart. In this article, we’ll discuss what makes a good triple net lease purchase. Next time you see a triple net lease for sale, you’ll know whether it’s the right property for you.
What is a Triple Net Lease?
If you aren’t very familiar with them, a triple net lease is a lease in which the tenant is responsible for property taxes, maintenance, and building insurance. Typically, buildings under triple net leases are large commercial buildings. In these arrangements, the entire building is usually leased by one tenant (1). The tenant then takes care of building management, including subleases and business operations. There are several benefits for both landlords and tenants.
Great for Landlords
For the landlord, a triple net lease means a steady source of income without a lot of personal involvement. The landlord can establish the lease agreement and then step back and let the tenant operate. Additionally, triple net leases are fairly low-risk because of the nature of the businesses who usually use them. They also often include built-in rent increases, leading to more income for the landlord (1).
Great for Tenants
Tenants like triple net leases because they allow them to operate their businesses on their terms. Since the landlord is often hands-off, tenants have the freedom to take care of minor problems and repairs on their own. On the other hand, tenants still have the security of a landlord if something major happens with the building.
What Makes a Good Triple Net Lease?
When looking to purchase a triple net lease property, it is important to know what makes a good investment opportunity. Here are a few things to look for.
Pay Attention to Location
The location of your triple net lease property may be the most important factor. Make sure you find a property that sits in a well-traveled location. Many triple net lease properties are places like shopping malls, office buildings, and industrial parks (1). A good location encourages steady business, leading to a better return on your investment.
Make Sure the Structure is Sound
When you purchase a triple net lease property, make sure the building’s structure is solid. Also, be sure to check for possible problems with the roof. Even though tenants are responsible for maintenance and upkeep, landlords in triple net leases are often still on the hook for problems with a building’s roof or structure (1).
Capitalize on Success
For a nearly foolproof investment, choose a property that is already occupied by a successful tenant. If a business is already thriving in your building, it is likely to continue that way. All you need to do is help them keep it going.
Find a Triple Net Lease for Sale
Now that you know what to look for in a triple net lease property, it’s time to find one. Net Lease World can help you find the perfect investment opportunity. Using their online tool, you can shop by price, location, and tenant. Check out their listings today and find the next addition to your portfolio.
References
1. ‘Triple Net Lease (NNN).’ Source: https://www.investopedia.com/terms/t/triple-net-lease-nnn.asp
