What Type of Net Lease Investment is Best for you


by Dwaine Clarke

January 2, 2014

For a new investor, net lease is probably a new term, especially if you invest in other types of real estate like apartments where you are accustomed to hearing the term “gross” With “gross” in terms of leases it means the tenant pays a gross amount of rent and typically that portion is used to pay off any expenses of the property or used however the investor chooses to. With a net lease, the investor receives the rent after all the expenses are paid from the tenant. These expenses in our other explanation of gross are typical maintenance, repairs, utilities, real estate taxes, insurance and other related things, these expenses are normally negotiated with the tenant to structure what will be the responsibility of the tenant and owner.

In today’s article I will explain the most common types of leases associated with these types of investments so you will have a better idea what is best for you.

NNN, “Triple Net” Leases are the traditional real estate investment with no management obligation for the owner. In its purest form (called a NNN – Triple Net Lease) the tenant manages the property, doing everything from paying all the operating expenses, property taxes, utilities, insurance premiums, maintenance and repairs. The landlord gets to collect monthly net rental income just as he or she would with a traditional real estate investment.

NN Leases are leases where the tenant agrees to pay monthly rent including insurance and real estate taxes but the owner is responsible for the structure or grounds of the property. These responsibilities typically include the roof, parking lot and the structure of the building. The tenant is then responsible for the operating costs of the property minus what the owner agrees too.

Modified Net Lease is a compromise between the gross lease and the triple net lease. The owner and tenant usually agree to set up a split of maintenance expenses such as roof, building structure and parking lot, while the tenant agrees to pay taxes and insurance. It allows a compromise situation that shares the costs of building operation and maintenance.

Modified Gross leases is the situation where the owner pays for initial base years real estate taxes and insurance while the tenant is responsible for common area expenses and utilities.

Understanding types of leases that are available you will also need to learn the types of ownership that are available such as Ground Leases and Fee Simple Leases I break each type down in those articles

There are many different types of leases that can be negotiated with a tenant but the most sought for are triple net leases. The benefits of owning a hands off investment where the tenant takes care of everything while the owner receives net rent is more ideal. Majority of the single tenant triple nets properties that are available are high profile, stable companies like CVS, Walmart, McDonald’s and Bank of America which is another plus for this type of investment.

Below is a short list of available NNN and NN Lease properties. To get information on the below investments or similar fill out the form on this webpage or call us directly

IncomeLong-term Capital Gains Tax RateShort-term Capital Gains Tax Rate
$19,900 and below0%10%
$19,901 - $80,8000%12%
$80,801 - $81,05015%12%
$81,051 - $172,75015%22%
$172,751 - $329,85015%24%
$329,851 - $418,85015%32%
$418,851 - $501,60015%35%
$501,601 - $628,60020%35%
At least $628,60120%37%

About the author 

Dwaine is the Founder and President of NNN Deal Finder an investment real estate services firm exclusively focusing on Single and Multi-Tenant Net Lease Properties. The firm provides a full range of brokerage and advisory services nationwide to High Net worth Investors, Developers, REITs and Institutional Investment Funds.
Contact Dwaine to discuss securing your next investment.

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