8 Reasons To Invest In Net Lease Properties Over Traditional Investments
Oct. 24 2022, Published 7:11 p.m. ET
Summary:
- An NNN or a triple-net lease is a new kind of investment in which the tenant pays for all expenses of the building.
- This is a different kind of investing as opposed to traditional investments.
- Steady income and transferable leaseholders are just some of the benefits of this kind of investment.
- There is less pressure on the landlord for upkeep and management.
- You should invest in a triple-net lease because of how reliable and steady the income is.
Choosing to invest in anything is a big choice. You want to make sure that you’re putting your money in the right spot. With traditional investments, there can be some limits as to where your money is going and how you’ll profit.
Luckily, there is another option. NNN leases or triple net leases could be perfect for choosing your next investment. There is a lot to know about triple-net investments, which can be confusing. Not to worry, today we will be going over all the details you need to know and why you should choose this type of investment.
So, you may be wondering, what is a triple-net lease? How can this type of investment serve me and is it the right thing for me to invest in? This and more will be covered in this article. So, read on!
What is a Triple Net Lease?
So, what is a triple net lease, and how is it different from traditional investments? As stated perfectly by Investopedia: “A triple net lease (triple-net or NNN) is a lease agreement on a property whereby the tenant or lessee promises to pay all the expenses of the property, including real estate taxes, building insurance, and maintenance.”
So, essentially, on top of rent and utilities, the tenant pays for every other expense of the property. This is most commonly found in commercial real estate. When you invest in a triple-net, you’re investing in the business that uses the space. They are described by Leverage as “the most hands-off, stable and secure CRE investments.”
This is a great way to invest in something stable and concrete, and you don’t even have to do a whole lot. There are lots of nnn for sale posted all over the internet. It truly has never been easier to invest in property. But why should you invest in triple-net properties? Here's 8 reasons why.
#1: Steady and Consistent Income
One of the best things about triple-net properties is that it brings in a steady stream of income for the tenant and the landlord. This is truly a win-win scenario. You as the investor will have a steady and consistent stream of income as long as your tenant continues to invest with you.
#2: Long-Term Agreement
Going off of the previously mentioned steady income, you will most likely be signing tenants to a long-term agreement. NNN leases usually come with an agreement of at least 10 years (Leverage, 2022). This means that you will gain that steady income we previously mentioned as well as a guarantee it will stick around for a few years.
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#3: No Burden of Expenses
Another thing that’s really great about triple-net investments is that the tenant is covering all the expenses of the property. This takes a huge burden off of the landlord who, in traditional commercial investments, would have to manage that all on their own.
#4: Less Management Hassle
On top of not having to worry about the burden of expenses you also don’t have to worry about micromanaging your tenants as much. They are in control of the expenses and the space; you just have to oversee things. This makes for much less hassle when it comes to managing your tenants.
#5: Better Kept Facilities
When you’re investing in a triple-net lease, you are going to be in control of a well-kept facility. The triple-net pre-pays for upkeep, therefore you will be investing in a building that is maintained properly and looks acceptable.
#6: Improved Stability for Tenants
Perfectly explained by Summit Properties here:
“Landlords and investors underestimate the cost of maintaining a building or get behind in rising taxes. Because those financial elements are already factored into the monthly rent, tenants possess a more secure workspace.” This essentially means that you’re ensuring your tenants gain a stable home for their business.
#7: They’re Transferable
One of the most significant benefits of investing in a triple-net is that you can most likely transfer the leaseholder. This means that you will always occupy the building, but should your tenant outgrow the space, you can simply acquire a new tenant. This makes for endless possibilities when it comes to your property.
#8: Reliable
Overall, the number one reason people invest in triple-net leases is because of how reliable they are. You are securing a space to invest in while receiving a guarantee of long-term income. This is the ultimate way to invest in property, especially because it’s so long-term.
In Summary
Sometimes you may feel like there's so much to know about traditional investments that you can’t keep up. It can be hard to know where to put your money and how to invest. Traditional investments can be complicated, and a lot of work.
This is exactly why investing in triple-net leases is right for you. Investing in a triple-net offers you a stable and steady income over the course of multiple years. The lease is transferable between tenants and there’s way less burden on the landlord for upkeep and payments.
Overall, there is a lot to love about triple-net leases. Whatever you choose to invest in, make sure it’s worth your time and money. It's always important to do your research when looking for new investment.
So, hopefully after reading this article, you have a better understanding of what a triple-net lease is and how it could benefit you as an investor. Don't invest in the wrong thing, find out what’s right for you.
Disclaimer: This article is provided by Bizitron.com and not necessarily written by a financial advisor. Investors should do their own research on products and services and contact a financial advisor before make any purchases. Individual results will vary.
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