When seeking NNN properties for sale or a commercial retail outlet lease, it is vital to understand how CAM differs from NNN. CAM is an acronym for Common Area Maintenance, while NNN features three nets, including CAM, property tax, and insurance.
How Do NNN Properties for Sale Differ from CAM?
CAM and NNN are the most popular options you’ll encounter when looking for commercial real estate lease properties for sale. The terms refer to expenses that landlords transfer to the tenants and are closely related.
Common Area Maintenance and NNN influence the calculation of property profits. They also provide essential metrics investors need to assess the financial health of the property. There are other similarities since they both deal with expenses incurred in commercial real estate.
However, both CAM and NNN have unique distinctions and significant financial implications. The key difference is CAM doesn’t include insurance or property taxes. NNN has a few other names, including triple net, and shouldn’t be confused with double and single net properties.
Common Area Maintenance is one of the three primary commercial property expenses tenants pay to landlords to cover operating expenses and overhead for common areas. Common CAM expenses include security, landscaping, scheduled maintenance, and trash disposal.
Other expenses on CAM properties include common area lighting, irrigation water, delivery areas, administrative fees, property management fees, sidewalks, driveways, stormwater, and electric maintenance.
Janitorial expenses, sewage, management salaries, window cleaning, stairwell maintenance, and loading docks also fall under CAM expenses. The expenses will vary from one property to another.
Triple net includes Common Area Maintenance, which covers all the expenses mentioned above. NNN also includes property taxes and insurance expenses, which would otherwise be the landlord’s responsibility.
NNN rents are often lower compared to a standard lease. Tenants pay for most NNN expenses. However, tenants won’t pay for non-recurring expenses, such as roof repairs, tenant improvement allowances, commissions, and parking lot paving.
Also, the expenses vary depending on the commercial property, so an office, retail, and shopping center will have distinct leases and requirements.
NNN properties transfer more expenses to the tenants, except for non-recurring expenses mentioned above. Such leases appeal to investors looking for low-risk properties because common area maintenance, insurance, and property taxes are all paid for by the tenants.
NNN properties also have lower rents to offset the tenant expenses. CAM properties don’t impose insurance and taxes on tenants, so investors have more risk to handle. As such, most Common Area Maintenance properties feature higher rents to cover the added risk.
However, CAM properties are susceptible to unstable income because of uncontrollable expenses such as tax increases and changes in building insurance.
NNN Properties for Sale
Are you looking for NNN and CAM properties for sale? Net Lease World provides the simplest way to search for high-quality Net lease investment properties nationwide. All you need to do is select a sector and state, prices, cap rate, annual rental income, and lease term preference.
Once you enter all details, click on the ‘Search’ button to view existing properties. Contact Net Lease World today to learn about triple net properties for sale.