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9 Reasons to Invest in Triple Net (NNN) Lease Properties

Posted On Tuesday, 26 April 2022 10:30
9 Reasons to Invest in Triple Net (NNN) Lease Properties

Triple Net Properties are considered to be one of the most financially secure investments since almost all the financial responsibilities are placed on the tenant.

The name ‘Triple N’ is given to these properties because the tenant is responsible for three payments in addition to the rent.

Property owners are free from stressful managerial obligations but can reap the rewards which come from holding a property.

It is also the ideal investment opportunity for people who don’t want to be managing properties full time.

1. Stability of Payments

Triple Net lease agreements are long term rental agreements and this guarantees a return on the investment value. 

Property owners will be able to predict how much profit they can make on their property and also sell it for an amount which gives them a substantial return on their investment.

As opposed to other short term rental agreements, landlords can be assured of a stable flow of rental payments. They don’t have to worry about keeping their properties occupied or finding new tenants every few months for cash flow.

The tenants who occupy NNN properties are usually not affected by the growth of the e-commerce sector which provides downside protection.

2. Decreased Management Responsibilities

Triple Net Properties are ideal investments since almost all the maintenance and management responsibilities fall on the tenant. 

Property owners who don’t want to dedicate all their time to property management and want to be released from the burden of maintenance responsibilities should invest in NNN properties.

They are also free from operating obligations and this makes management simple and stress free.

NNN properties are also great investment options for people who have another job on the side.

3. Reliable Tenants

Since Triple Net tenants are responsible for covering all the expenses associated with the property like taxes, maintenance and utility, only tenants who are financially secure rent them out.

Landlords can use a standard rating system like S&P Global Ratings to evaluate their tenant’s creditworthiness before lending them the property.

Retailers like fast food restaurants, grocery stores, convenience stores and gas stations are typically the ones who go for Triple Net properties. These include multi-tenant property sets so the rents get divided among them.

Furthermore the companies which prefer NNN properties usually have a stable cash flow so this offers more security and financial stability for the landlord.

4. Assurance For Both Parties

Both of the parties who enter into a Triple Net lease agreement will be aware of the structure and the terms of the lease for the entire rental period.

If there are any additional expenses to be paid, they will always be mentioned in the contract for the knowledge of both parties. Any potential increases in the rent will also be mentioned.

This information will help the property owner estimate their return for one year.

There are several high quality triple net lease investment properties available in the market for potential investors.

You can look at these nnn properties for sale and evaluate them depending upon the information given like annual income, monthly income and cap rate.

There is also an option to filter properties according to purchase price, cap rate, annual rental income and lease term preference. 

5. Improved Property Control

Triple Net properties are great options for people who want commercial properties for their brand or business.

Commercial properties tend to cover more than 15,000 feet. In such cases, having proper control over the entire 15,000 feet or more is vital for the business to run smoothly.

Since Triple Net properties offer more control, the tenants don’t have to wait or rely on the landlord to come in case of maintenance issues or other problems with the property.  

The tenants also have the freedom to call whoever they want to make the repairs or tend to other necessary things.

6. Low Turnover Rate

Turnovers can be extremely expensive and the landlord ends up losing a lot of rent during the vacancy period.

The low turnover rate helps assure property owners of a better cash flow rate. This is because the tenants who lease Triple Net properties usually stay for a sufficient length of time.

It also minimizes a lot of expenses like leasing and marketing expenses which are usually a huge financial burden. 

Rental property owners can save both time and money this way.

7. Good Source Of Passive Income

One of the best things about NNN properties is that you can receive a steady stream of passive income without active involvement.

You can make money from any location in the world without having to be physically present. 

The income stream is also reliable since the tenants will pay their rent and other expenses every month.

Property owners get to work with big commercial clients and at the same time be relieved of the huge responsibilities other property owners face.

In order to make sure you get a good return on your investment without much work, make sure you draw up a smart lease structure and also find a profitable tenant.

8. Opportunity To Diversify Your Investment Portfolio

A diversified investment portfolio helps in limiting exposure to a single asset or risk by incorporating a wide variety of investments.

It is a good way to balance your risks and rewards so you don’t end up with nothing.

Since NNN properties are less risky and provide you with a steady source of passive income, incorporating these kinds of investments in your portfolio will help achieve a good balance.

It will also allow you to experiment with riskier investments.

9. Increased Property Value

If you are a new triple net property investor and the present tenant is at the end of their lease duration, you can negotiate a new lease term with him.

In case a lease has expired, you can put the property at a higher rate if the  market conditions are favorable.

Conclusion

While Triple Net Properties are definitely a great investment option, make sure you go through all the terms and conditions associated with them. You should also take care to structure your lease agreement properly.

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