The NNN Lease, often just called the triple net lease, is a common lease structure used in commercial real estate. Despite the popularity of the NNN lease, the triple net lease structure is still commonly misunderstood by many commercial real estate professionals.
What does NNN mean? How is it different from another option called a gross lease? Is one better than the other?
Among net lease investment properties, there are sub-types of leases with different expense structures. Below, we have outlined the various types of net leasesranging from absolutely no landlord responsibilities or requirements to expense structures that require a higher level of responsibility from the investor.
Sometimes abbreviated to Abs NNN leases, absolute net leases are defined by their highly passive structure. Absolute net leases require absolutely no landlord responsibility for expenses whatsoever, making them highly attractive to investors who desire a truly passive income stream.
While other expense structures require the landlord to pay for some or all the building expenses, absolute net leases require the tenant to pay these expenses directly. The tenant pays for property taxes, insurance, and maintenance of the roof, structure, and common areas of the NNN property. The difference between a triple net lease and an absolute net lease is that in a triple net lease, the tenant may not pay for expenses directly.
In some situations, the landlord may pay for expenses up-front on behalf of the tenant, but by calendar or fiscal year-end, the tenant provides full reimbursement for those expenses to the landlord. If the landlord is responsible for paying any expense that is not ultimately reimbursed by the tenant, the lease should not be considered a true triple net lease. Single net leases, or net leases, are similar to NN leases in that the landlord is responsible for paying for property maintenance in addition to another expense, like property taxes or insurance.
However, single net leases require the tenant to pay for remaining expenses. Single net leases are rare.
What are the Different Types of Net Lease? Single Net Lease N or Net Lease Single net leases, or net leases, are similar to NN leases in that the landlord is responsible for paying for property maintenance in addition to another expense, like property taxes or insurance. Be the first to see our net lease listings. Find a Property Search our database of commercial listings.