Is A Triple Net Lease A Good Investment?
The triple net lease has emerged as the popular choice for commercial real estate investment in recent years. NNN lease is the one where the tenant has to bear the operational expenses for the property, such as property taxes, insurance, and maintenance. Apart from taking care of these expenses, they also pay a monthly base rent to the owner. The rental value may be relatively less than a non-NNN property, but owners still have an advantage with this form of investment. Let us explain the reasons why a triple net lease makes a viable option to invest your dollars.
Rewards without risks
The best thing about NNN leases is that they are among the most secure investment opportunities in the commercial real estate landscape. These properties assure steady and predictable income over an extended time, making them ideal for beginners and seasoned investors alike. The leases are often with strong tenants like retail brands and chains, so the risk is low for such investments. Further, tenants often commit to long-term leases, and owners are safe from the expense and stress of re-leasing the properties. The rewards definitely outweigh the risks.
Hassle-free investment
Owners of NNN properties need not worry over the small stuff as they are free from the operational obligations of holding the property. Tenants pay for their own insurance, maintenance and taxes, so the responsibility for the upkeep and expenses is totally theirs. It comes as no surprise that a majority of investors look for Triple net lease for sale these days. They need not stress about the time and money commitments related to property management, making it a smart bet for them.
Stability is not a concern
When a NNN property has a creditworthy tenant in a long-term lease, the chances of default on the lease payments are minimal. The income potential for the owner is stable, and they can easily avail the profitability of the lease. Further, most triple net lease tenants are from recession-proof domains such as retail, pharmacy, and banking. There is hardly a probability of the business missing on payments or ending the lease even during a downturn and recession phases.
Long-term leases
Like any other commercial real estate lease, NNN leases are typically longer than residential leases. But they are a lot longer than the average commercial real estate, which lasts from three to five years on average. NNN leases, on the other hand, can extend up to 25 years or more. Long-term leases are always desirable for owners because there is less stress about turnover, vacancy, and re-leasing the property. They can simply avail the benefits of steady income year after year.
Considering these advantages of a triple net lease, they definitely make the best business opportunity for a commercial real estate investor. But one has to be selective about choosing the right property with a stable tenant and extended lease. The right choice can serve as a lucrative deal and set you up for long-term passive income without a break.
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