What Is a Triple Net Lease?

A Triple Net Lease is a type of commercial lease where the tenant pays not only the base rent but also the property taxes, insurance, and maintenance expenses. This lease structure is commonly used in commercial real estate because it benefits both landlords and tenants by clearly defining responsibilities and providing financial predictability.

Triple Net Leases are often used in retail and office spaces, particularly for franchise locations, medical facilities, and standalone buildings leased by national brands. They are attractive to investors who want steady cash flow with minimal management responsibilities.

How a Triple Net Lease Works

In a Triple Net Lease (also referred to as an NNN lease), the tenant takes on the responsibility for:

Property Taxes: Paid directly or reimbursed to the landlord.
Insurance: Coverage for building and liability risks.
Maintenance: Upkeep for landscaping, repairs, HVAC, roofing, and more.

Pros and Cons of a Triple Net Lease

Benefits for Landlords

Predictable Cash Flow: With expenses covered by the tenant, income becomes more stable.
Low Maintenance: Landlords don’t need to handle day-to-day management or surprise repair bills.

Benefits for Tenants

Lower Base Rent: Since tenants absorb property expenses, landlords may offer lower rent rates.
Operational Control: Tenants can make property decisions that align with their brand and business goals.

Considerations for Tenants

Variable Costs: Tax rates, insurance premiums, and maintenance needs can increase.
Major Repairs: Unless negotiated, tenants may be responsible for roof or structural repairs.

Who Should Consider a Triple Net Lease?

Best Fit For:

Landlords & Investors seeking passive income with fewer responsibilities.
National Tenants & Franchises who value long-term control over the properties they occupy.

Not Ideal For:

Small Businesses or Startups with tight budgets that can’t handle unpredictable costs.
Short-term tenants who need flexibility rather than long-term commitments.

Tips Before Signing a Triple Net Lease

Before signing on the dotted line, keep the following in mind:

Review the Lease in Detail: Understand who is responsible for what, especially regarding the roof and structure.
Inspect the Property: Know the current condition of the HVAC, plumbing, and building systems.
Seek Legal Advice: Have an attorney review the lease for hidden costs or vague terms.
Request Expense History: Ask the landlord for previous bills related to taxes, insurance, and maintenance.

Final Thoughts: Is a Triple Net Lease Right for You?

The Triple Net Lease structure is designed for investors wanting passive, predictable income and tenants wanting control over their space. It works best when both parties understand their roles and responsibilities clearly.

If you’re exploring commercial lease options or thinking about investing in a property with long-term tenants, this lease format may be ideal. Whether you’re a buyer, seller, or tenant, I can help you find the right lease ideal for your goals.

Connect with me today and let’s start crafting the right strategy for you!