One reason investors tend to favor triple-net-lease (NNN) property is that they can sit back and collect a steady stream of passive income from rental payments without incurring any of the costs to manage and operate that property. Instead, an NNN lease typically transfers those operating expenses to the tenant who must their pro rate share of those costs over the life of the lease term. While the devil of these financial obligations must be detailed in the terms of the lease agreement, NNN tenants will typically be responsible for paying rent, utilities and repairs on the leased space as well as their share of the structure’s property insurance, real estate taxes and common area maintenance (CAM) costs, which can include the following:
Investors should work with experienced real estate advisors to assess triple-net-lease opportunities to identify and understand their specific responsibilities for managing the property and covering all its operating expenses.
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