The Risks and Benefits of NNN (Triple N) Properties

A Triple Net or NNN lease deems that the tenant pays a fixed rent as well as some of the other expenses such as insurance, maintenance, repairs, taxes, utilities or other items listed in the signed contract. This type of contract is most popular with businesses looking for long term lease in order to have more control over the property.

Benefits to the landlord are typically that they don’t have to pay taxes and insurance, conduct repairs, take care of remodels or ensure that regular maintenance work is carried out on the property. The landlord also has the added bonus of securing a long term lessee and not having to worry about finding new lessees. With NNN properties the benefits aren’t limited to the landlord. The tenants also have many benefits such as the ability to have their own building, conduct their own remodeling and have control over all aspects of the property. The tenants also have the advantage of not having to tie up their capital in a building of their own.

Triple N properties do not simply entail benefits to all parties instead there are certain risks to both parties involved. Landlords may face situations where the lessee’s business is failing and they cannot make regular repairs, pay taxes or make insurance payments. From the lessees point of view, they may get a building that requires a huge repair like the roof or plumbing. The rising cost of property is also an issue although smart tenants would include a cap on lease payments in their contract. These disadvantages could be mitigated with a little research on both parties before signing the lease. However in general NNN properties entail more benefits than disadvantages.