What is a triple net zero lease?

A triple net lease is an agreement between a property owner and a tenant where the tenant pays property taxes, insurance premiums, and maintenance upkeep and repairs, in addition to a monthly rental fee of the building or space.

Is a triple net lease a good idea?

The Good: For the tenant, the triple net lease can be great. A tenant has more freedom with the structure and can better customize a space for use WITHOUT the capital investment of a purchase. The tenant pays less for rent, as they have incurred other expenses.

What is triple net lease example?

Why Triple Net Leases are Popular With Investors As such, the risk of a credit tenant defaulting on their lease payments is low, even in times of economic distress. Examples of credit include CVS, Walgreens, and Dollar General.

What is the landlord responsible for in a triple net lease?

With a Triple Net Lease—sometimes referred to as “NNN”—the tenant assumes responsibility for all costs of the property, in addition to paying the rent. The tenant pays the utilities, real estate taxes, building insurance, and maintenance.

What is $25 NNN?

NNN stands for Triple Net rent. In this type of commercial real estate rent, you pay the amount listed and you also have pay additional costs (usually Operating Expenses) on top of that. For example: say the Office Space listing you’re interested in says the rent is $24.00 NNN per sqft/year.

Who pays for roof repairs in a triple net lease?

In a triple net lease property, the tenant agrees to pay for all the expenses involved in operating the property. These expenses include fixed and variable expenses, as well as common area maintenance costs (CAM). Generally, the owner is responsible only for structural repairs.

How much is triple net usually?

It is typical to see a $3 a square foot NNN cost in my area, which would add $15,000 a year or $1,250 a month to the costs. Your base lease rent of $4,166.67 could easily turn into $6,000 a month actual cost.

What is not included in a NNN lease?

An NNN lease is the most common type of commercial lease and is commonly called a triple net lease. On an NNN lease, tenants pay additional expenses in addition to the lease fee, to the landlord or lessor. The NNN fees includes property taxes, property insurance and common area maintenance for a building (CAM).

Is NNN annual or monthly?

The estimated operating expenses (aka NNN) are $10 per square foot per year. The total yearly rent you would pay equals $40 sf per year. So if you are leasing 3,000 sf then your yearly rent would be $120,000 or $10,000 per month.

Can you negotiate a triple net lease?

Absolutely not! There are many areas where a tenant can negotiate a NNN lease to make it more favorable. If the tenant is taking on all responsibility and risk of the landlord’s overhead, then the tenant may be able to negotiate a more favorable base rental amount.

Are triple nets negotiable?

How do you calculate triple net lease?

Calculating a Triple Net Lease. Triple net leases are calculated by adding the yearly taxes on the property and the insurance for the space together and dividing that amount by the building total rental square footage.

What are the advantages and disadvantages of a triple net lease?

It is far more common in the commercial property sector than in residential rentals. The main benefits and drawbacks of a triple net lease differ for the landlord and tenant, but they include a lower rent payment, higher costs for the tenant, and the risk that the tenant will not maintain the building as required.

What does triple net mean in a commercial lease?

Updated January 07, 2019. A triple net lease—sometimes referred to as an NNN lease , a net-net-net lease, or an absolute net lease—is a commercial leasing term that refers to a situation in which the tenant pays virtually all the operating expenses associated with maintaining the property he’s renting.

What you should know about the triple net (NNN) lease?

A Triple Net (NNN) Lease is a commercial lease agreement in which the tenant agrees to pay a base rental amount and the net amount of the landlord’s real estate taxes, the net amount of the building insurance, and the net amount of the common area maintenance expenses.