Triple-Net Leases | Why You Need To Own One As An Investment

Triple Net Leases Being a landlord can produce quite a headache, especially when you consider all the maintenance it involves. Even worse, such real estate investments can turn sour on a dime when the cost of upkeep and unknown building expenses and repairs is factored in. Triple net leases offer an enticing alternative. Not only can they eliminate these aforementioned issues, but they can also create a steady and secure cash flow for the investor. The Triple Net Lease Definition In a triple net lease, the tenant pays all the ongoing operating expenses, property taxes, utilities, insurance premiums, maintenance and repairs included. Meanwhile, the landlord gets to collect monthly net rental income just as he or she would with a traditional real estate investment. Such a lease usually extends over the long term, with a financially strong corporate entity guaranteeing a lease span of 10 to 25 years. Why Triple Net Leases Real estate investors usually consider triple net properties as a very good investment option. That's because they are one of the most liquid and secure real estate ventures available. Not only do they usually sell quickly, but the tenants who opt for such properties are normally high-qualified and creditworthy. Most large enterprises prefer leasing property over owning it. Why? Because by doing so, they save on real estate venue capital. They then use that extra cash for other core business activities. To compensate for their lack of ownership, they usually associate the leased property with their corporate identity and image. Therefore, they prove to be great tenants who want their building to represent their ideal image. In addition, they pay their taxes on time, they keep the property in good shape, and they maintain the basic facilities well. Moreover, they find it more viable to possess physical control alone over their premises than to own it outright with their own capital commitment. The commitment of both the landlord and the quality lessee associated with these triple net properties ensures the long-term appreciation and security of both parties. Triple Net Leases as 1031 Investments Triple net leases are also a very good option for those individuals who are looking for a 1031 investment. Single-tenant 1031 net leased properties are a very practical and successful investment option. A triple net lease via a 1031 will allow the investor to realize even higher returns. How? By deferring his or her taxes and thus increasing his or her overall internal rate of return. Triple net leased properties are usually single-tenant, retail, or industrial properties. They are long-term leases that are typically extended to corporate tenants. A few examples of such corporate tenants are Blockbuster, Federal Express, Home Depot, Family Dollar, Wal-Mart, AutoZone, and Applebee's. These tenants use triple net leases for one very good reason: A net leased property means ownership control is maintained without having to bear the expenditure of up-front cash.