NNN: The Allure of Triple Net
Discretion, as the saying goes, is the better part of valor. So many of our clients come to us seeking real estate deals that are safe, secure and discreet. From celebrities and financiers to business owners looking to invest in low-maintenance deals that offer security and are often discreet, Triple Net or NNN leasing is an enticing option. Like any investment, understanding the inherent risk and potential return is essential even in something as seemingly simple as NNN.
For those who have heard of Triple Net but never given the concept much thought, it is a fairly straightforward concept. Triple Net is a lease agreement that places nearly all of the responsibility upon the tenant. Think CVS, TD Bank or McDonald’s. Many high profile tenants such as these have very specific conditions that satisfy their business models but require as much control over their environments as possible. The term Triple Net refers to the three most substantial areas of real estate management: taxes, insurance and maintenance. NNN tenants want to pay for and manage each one of these areas, leaving the property owner with little day-to-day interaction.
It’s easy to see why a property owner would be interested in such a tenant. But not every parcel of land is necessarily right for this type of transaction. Likewise, investors typically receive a lower return for these properties with the understanding that the tenant is highly rated and a safe investment. Owners should have a clear understanding of the potential returns, the health and stability of the tenant and any local ordinances that might influence a tenant’s occupancy. Tenants also have several factors to consider such as easements, traffic flow, zoning restrictions and environmental concerns.
With any real estate transaction, such as Triple Net leases, being armed with facts and knowledge of the area is critical. Sovereign Realty Group is extremely happy to explore all possibilities to help you navigate the process or just act as a resource and advisor. Let us know if you have any questions about NNN or any of the services you see listed on our site.