Introduction: Net leases have gained significant popularity among investors in recent years due to their unique structure and potential for stable cash flow. In this blog post, we will delve into the world of net leases and explore the different types available in the market. Whether you’re a seasoned investor or a curious newcomer, understanding these lease types will provide valuable insights for your investment strategy.
Single Net Lease (N Lease): A single net lease, also known as an N lease, is a lease agreement where the tenant is responsible for paying the property taxes in addition to the base rent. The landlord typically covers all other expenses related to insurance, maintenance, and utilities. While the tenant assumes the responsibility of property taxes, the landlord still maintains ownership and retains control over the property.
Double Net Lease (NN Lease): In a double net lease, also referred to as an NN lease, the tenant is responsible for property taxes and insurance, in addition to the base rent. The landlord remains responsible for structural repairs and maintenance of the property. This lease type offers a slightly higher level of tenant responsibility, compared to the single net lease.
Triple Net Lease (NNN Lease): Considered the most popular and widely-used lease type in net lease investments, the triple net lease (NNN lease) places the majority of property-related expenses on the tenant. In addition to base rent, the tenant assumes responsibility for property taxes, insurance, and maintenance costs, including repairs and utilities. NNN leases are often long-term agreements, providing stable income for investors seeking low management responsibilities.
Absolute Net Lease: An absolute net lease is the most comprehensive form of a net lease, shifting all expenses and risks associated with the property to the tenant. In addition to the expenses covered in a triple net lease, an absolute net lease includes costs such as roof repairs, structural maintenance, and even major capital expenditures. This type of lease offers