Guide to Triple Net Gateway and Its Benefits
One of the most popular property types in the commercial real estate is what is known as the triple net or the triple n (3N) that represents 3 net terms given to tenants with high credit ratings. What this means is that the tenant is responsible to pay the leased real estate taxes or tax net, insurance, and all property maintenance.
Suffice to say that these triple-net deals appear to be the perfect investment for the property owner since there is no management responsibility that is involved and therefore this is the best place to put their extra money with no headache and better profitability. Property owners are assured on a long-term lease since the tenants that they get are only those that have satisfied the qualifications required. 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.
For a tenant, it involves higher risk because this setting seems to favor the property owner more than the tenant. However, there are various reasons which shows that for some retail and industrial rentals, this is not the case.
You have more control of the property for a retail and some industrial rentals like plumbing systems or roof repairs which can be passed without the approval of the property owner. The tenants are able to hire contractors or anyone who can install or repair various fixtures which are necessary for their present needs. Of course, without violating its original novelty like putting substandard roofing system or anything that is critical to its long time serviceability. If the tenant wants to make changes in the property, he can do so without the control of the owner of the property. However, the lease moderates this agreement that is signed prior to the tenant occupying the place.
One of the biggest advantages of a triple net lease is that it usually has lower rents compared to gross rents. These lower rents can then absorb the lessee fluctuating operational expenses that is typical to the mark of a retail and some 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. What this includes is the maximum amount you are liable for over the basic rent amount each year. Keep in mind that you are liable for these extra expenses no matter how well or how poorly your business goes during the lease term. When carried out correctly you will see that a triple net lease will not only benefit the property owner, it will also benefit the tenant.