What does the term triple net mean?
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. These expenses are in addition to the cost of rent and utilities.
How is triple net calculated?
Triple net leases are calculated by adding the yearly taxes on the property and the insurance for the space together and dividing that amount by the building total rental square footage. The process of calculating a triple net lease is simplified when an entire building is leased to one tenant.
Why is NNN a thing?
Although No Nut November was originally intended to be satirical, some participants claim that abstaining from ejaculating and watching pornography has health benefits. An Urban Dictionary entry for No Nut November was published in 2011, and, in 2017, the movement started to gain popularity on social media.
Why is NNN good?
Here are the benefits of NNN investments: Low-risk investment: since they are often leased by investment-grade tenants. Reliable income stream: since the tenants pay their rent and expenses each month. Guaranteed, long-term tenancy: NNN tenants often sign 7 to 10+ year leases.
Why is it called a triple net lease?
A single net lease requires the tenant to pay only the property taxes in addition to rent. With a double net lease, the tenant pays rent plus the property taxes as well as insurance premiums. A triple net lease, also known as a net-net-net lease, requires the tenant to pay rent plus all three additional expenses.
What is the net initial yield?
The net initial yield, which is the Commonwealth term for the North American term going-in cap rate, is a critical property investment metric because it measures a real estate asset’s income earning capacity at the time of purchase. The formula for calculating the net initial yield is the following:
What is a triple net lease?
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.
How do you calculate the initial yield of a property?
The formula for calculating the net initial yield is the following: Net Initial Yield = Net operating income (NOI) in the first year of the holding period / Investment cost The investment cost includes the purchase price plus any other costs spent by the investor for acquiring the property.
What to consider when buying a triple net property?
Another consideration is re-leasing. Many triple net properties are sold at the end of the long-term lease, which shifts the risk for re-leasing to the new owner. There could be an issue with tenant rollover if they don’t have a strong team to handle it.