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| What exactly does the term "Triple Net Lease"
mean? Also known as "NNN", this is a lease in which
the lessee agrees to pay, in addition to rent, all costs,
including operating expenses, property taxes and insurance. |
| A lease is usually "triple net" if it requires
the tenant to pay the following: |
| 1. |
All operating and maintenance costs during
the term of the lease |
| 2. |
All state and local property taxes |
| 3. |
Full liability and property damage
insurance |
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Are net lease properties safe investments?
Overall, real estate investments are less risky than many other
investment opportunities. Net lease investments are often
considered to be one of the safer real estate investments, since
typically there is little to no tenant turnover, the leases are
usually longer term, and depending on the credit worthiness of
the tenant, the risk is often significantly mitigated. |
Leases are generally how long?
Normally, Net Lease Properties contain lease terms between ten
and twenty years. Shorter lease terms may be problematic and
longer lease terms are generally much more difficult to locate. |
What kinds of financial returns can I expect?
An investor can expect to purchase net leased properties at a
Capitalization Rate (Cap Rate) basis at between 5.50% to 9.00%,
Cash on Cash (COC) returns of 0 - 8% and After tax, Internal
Rates of Return (IRR) of 7 – 14%. Of course, many variables
impact these potential returns and no two opportunities are
exactly the same. We recommend you analyze the following factors
before making any Net Lease decision: |
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