Guide to Triple Net Gateway and Its Benefits
When leasing commercial real estate, there is a popular property type known as the triple n or 3N meaning 3 net terms given to tenants with high credit standing. What this means is that the tenant is responsible to pay the leased real estate taxes or tax net, insurance, and all property maintenance.
Commercial properly owner would do well to invest in triple net deals since there is no management responsibility involved and you get better profitability without the associated headaches. They are also assured of a long-term lease because they will then have to get a tenant that would qualify. This then also means having a stable net income and a unique measure to bypass taxes and insurance to shelter their leased real estate investment.
The tripe n arrangement seems to favor the property owner more and then tenant so it involves a higher risk to them. However, there are various reasons which shows that for some retail and industrial rentals, this is not the case.
One reason is that retail and industrial rentals have more control of the property, so if your need plumbing system installation or roof repairs, you don’t have to ask the property owner for approval. The tenant has the power to hire anyone when it wants to either install or repair various fixtures that it deems appropriate for their present need. But these have qualifications like you don’t hire contractors that use substandard roofing materials or anything critical to its long lifespan. Tenants usually have the right to make small changes to the property, and operate independent of the property owner’s control. However, the lease moderates this agreement that is signed prior to the tenant occupying the place.
Another benefit one gets from a triple net lease is the low rate of rental compared to gross rents. Since they are responsible for operational expenses, the low rents are able to sort of balance the equation which is typical of retail and industrial rentals.
The Triple Net Gateway for tenant need quality risk management after identifying risk factors involved prior to signing the contract, so this means that one must be cautious in negotiating caps. This includes maximum amount that you are liable for over the basic rent amount each year. You have to remember your liability for the extra expenses and this does not depend on whether your business makes good or not. When it comes to who benefits more with tripe net lease, it is safe to say that both property owner and tenant benefit from it equally.