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Why NNN Properties Are an Attractve Option for Investors

By on March 26, 2018

Net lease

Investment in real estate, and especially in commercial real estate, has picked up in recent years. Among various options, triple net leases are an attractive investment vehicle for commercial real estate investors. New investors may have some questions about these leases and why invest in triple net properties. Triple net or NNN leases are considered to be a low-risk investment with a guaranteed income.

Real estate investment surge is led by millennials
Real estate is again an attractive option for investors. In 2015, real estate investments increased by 85% and continue to grow. Commercial real estate is especially in demand. Demographically, the real estate investment surge is led by the millennials. More than half, or 55% of this cohort has an interest in real estate investment. This is a higher proportion than in other demographic groups.
Among commercial real estate investment vehicles, triple net or NNN leases are an attractive choice. These are also the standard form of commercial leasing. They derive their name from the three obligations undertaken by the tenant, usually in consideration of a lower rent. Examples of NNN properties are office buildings, shopping malls, industrial parks, banks, pharmacies, and restaurants.

Why invest in triple net properties?
In an NNN lease, the tenant agrees to pay three nets, namely, the real estate taxes, building insurance, and maintenance. The tenant is also responsible other costs like janitorial and other utility services. This simplifies matters for the landlord/ investor, and is seen as a low-risk investment with guaranteed income for the investor. The property owner is responsible for the structural safety and integrity of the building.
However, triple net properties investors must be accredited, and they must have a high net worth. This must be at least $1 million, without counting the value of the primary residence, or $200,000 of income. NNN properties are typically leased to a single tenant for a ten year period to begin with. Tenants have the option to carry out extensive renovations.

As investments in commercial real estate increase, many investors are interested in considering different types of investment vehicles. New investors will have questions such as why invest in triple net properties. These are considered low-risk investments with stable income. The landlord’s management role is limited, reducing the burden of responsibilities even more.

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