A triple net lease is one in which the tenant pays all of the ongoing operating expenses. The landlord receives a net rent, because the tenant pays the property taxes, utilities, insurance premiums, maintenance and repairs. Most net-leases are long term (10-25 years) with cost-of-living increases in the rent. Triple net properties are considered by many to be the most liquid and secure real estate investments available. Nearly all such properties tend to sell very quickly, especially those with solid, credit-worthy tenants.
Many successful regional and national companies would rather lease the property they occupy for their trade or business, than own it. Leasing frees up corporate funds for further business expansion, rather than tying up capital in “brick and mortar.” Because their company name and logo are typically on the building they are leasing, and the public perception is one of ownership, they have a vested interest in assuring the taxes are paid, the building is in good repair and the grounds and facilities are clean and maintained. Leasing the building on a triple-net lease basis gives the companies the control they desire over their physical environment without the capital commitment of ownership.
Some examples of net-lease tenants are: Walgreens, Arby’s, Sherwin Williams Paint, Staples, U.S. Government, Taco Bell, Checker Auto Parts, Goodyear Tire, Barnes and Noble, Radio Shack, Microsoft, PetsMart, Jiffy Lube, Carl’s Jr., Gart Brothers, HomeBase, Federal Express, Hartford Insurance Co., Applebees, Tractor Supply Co., Family Dollar, and Marie Calendars.
Many real estate investors own their properties as a sidelight to their full-time jobs, and have little time to devote to their real estate investments. As baby-boomers approach retirement, they seek to eliminate the hassle of active property management, and take advantage of a more passive income approach. Triple-net lease properties can provide appreciation potential as well as a secure monthly income without the landlord responsibilities normally associated with real estate ownership. Many “burned-out” landlords turn to net-lease real estate as the property investment of choice.
1031 Exchange Place, LC specializes in providing government and triple net lease real estate to investors and those involved in a 1031 exchange.