A net lease in the commercial real estate field requires the tenant to pay some of the property expenses in addition to the rent which generally would have been paid by the owner of the property. The expenses include maintenance, repairs, property taxes, insurance, and utilities. The expenses are classified into three nets which are insurance, property taxes, and maintenance.
Types of net leases include a single net lease, Double net lease, triple net lease, bondable lease and ground lease. In a single net lease, the tenant or lessee is responsible for paying the property taxes. In the double net lease, the tenant is responsible for building insurance and property tax. The landlord is the one that is responsible for the expenses that are usually incurred for common area maintenance and some of the structural repairs. Check this to learn more.
In a triple net lease, the lessee agrees to pay the real estate taxes and building insurance without forgetting the maintenance. The tenant is responsible for all costs that are associated with the repairs. It is called NNN lease and is different compared to the other net lease. This lease has a lot of benefits for both the landlord and the tenant. It facilitates proper control of the property, especially by the tenants. If he or she thinks the roof or the plumbing system requires some repairs, then there is no need for contacting the landlord. The tenant will have the power of hiring anyone that they want to help in repairing the various appliances and systems.
Another biggest advantage of a triple net lease is the lower rent compared to the market rent. This is usually because the tenants are responsible for paying taxes and building maintenance making them be charged a lower rent. There is also minimal management for the landlord that own properties with a triple net lease. He or she will be left with less work to take care of off. The landlord who has full-time jobs are therefore not inconvenienced by these type of net lease investment. Here there is also a stable cash flow hence the landlord is guaranteed a positive cash flow. Follow this link for more information.
A bondable lease which is also called a triple net lease is the extreme version of a triple net lease. The tenant carries the possible real estate risk like rebuilding after causality. They are mainly used in credit tenant lease. Lastly, a ground lease is where the owner of the land will give the lessee an opportunity to construct a building. Go to https://en.wikipedia.org/wiki/Net_lease for other references.