Advantages of Triple Net Gateway Lease to Tenants
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.
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. 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.
Tenants have a higher risk in this arrangement since the property owner is favored more than the tenant in this arrangement. This, however, is not the case for some retail and industrial rentals for many reasons which we will see below.
Is some ways it also benefits retail and industrial rentals since they can have full control of the property and they can do things like install plumbing systems or repair the roof without getting the approval of the property owner. In this arrangement, whenever it is necessary to have various fixtures either installed or repaired, the tenants are able to hire contractors or anyone to do the job. But these have qualifications like you don’t hire contractors that use substandard roofing materials or anything critical to its long lifespan. Making small changes to the property is included in the tenants right which is not under the control of the property owner. However, the lease moderates this agreement that is signed prior to the tenant occupying the place.
The rental of triple net lease properties are lower than regular lease rentals. 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 tenants will require a kind of quality risk management after it has identified the risk factors that is involved prior to signing the contract which 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.