The Top 5 Types of NNN Leases

Triple Net leases have some unique and distinguish characteristics that it is important that the investor understand the differences, so you can make a more informed investment decision. But before we get into the top 5 types of NNN leases, let’s define first what is a NNN Lease, and what each N represents. A triple net lease is a one in which the tenant is responsible for Property Taxes, Property and Liability Insurance & Maintenance Costs. Therefore, your rental income is Net of the three major and most important costs relating to owning the property.

Now, let’s get into the Top 5 Types or NNN Leases. 

1. Absolute NNN Lease

The Absolute NNN Lease is the most common NNN lease and the one that attracts investors the most. In an Absolute NNN lease the Tenant is responsible for absolutely everything, Property Taxes, Property and Liability Insurance and Maintenance Costs. In addition, the Tenant is also responsible for the roof, structure, parking lot, air conditioning system, among others. This type of lease of lease offers the investor a truly passive income investment with zero landlord responsibilities. 

2. Fee Simple NNN Lease

A fee Simple NNN lease means that you own both the land and the building. This type of lease gives the investor the additional benefit of being able to depreciate the building, which will reduce the taxable rental income. Most fee Simple leases are Absolute NNN as well. 

3. Ground NNN Lease

In a NNN Ground Lease you own the land, but not the building. Therefore you cannot depreciate the building. In a ground lease the Tenant leased the land from the original owner and built their own building at their own cost. However, the Tenant only has the right to occupy that building for the length of the lease, if the Tenant might decide to leave early or not renew typically the building becomes property of the landlord at that time. Most Ground Leases are also Absolute NNN as well since the tenant is responsible for the capital improvements of their own building.

4. Net Lease (Owner is Responsible for the Roof and Structure)

A Net Lease means that your rent is Net from Property Taxes, Property and Liability insurance and maintenance costs, the tenant takes care of those payments on behalf of you, and the rent that you receive is net of those expenses. However, the Landlord retains responsibility for the roof and structure of the property. Those type of expenses are considered long term capital improvements, so if you buy a new property, most likely you will not have to incur in those expenses for the long time. 

5. NN Lease (Owner is Responsible for the Roof, Structure, Parking Lot, among others)

In a NN lease your rental income is still Net of Property Taxes, Insurance and Maintenance Costs, so the tenant is responsible for those expenses. However, the owner retains responsibility for pretty much all capital improvements, such as roof, structure, parking lot, air conditioning system, among others. 

In summary, the Top 5 Types of NNN leases are:

  1. Absolute NNN Lease
  2. Fee Simple NNN Lease
  3. Ground NNN Lease
  4. Net Lease (Owner is Responsible for the Roof & Structure)
  5. NN Lease (Owner is Responsible for All Capital Improvements)

It is important to highlight that not all leases are created equal. Each lease is unique and contains specific clauses that were negotiated custom made to fit the needs of both the original owner of the property and the tenant. 

Therefore it is very important that you hire and experienced and knowledgeable Real Estate attorney that can thoroughly review the lease and highlight areas of concern. 

It is equally important that you hire and experienced Buyer’s broker that can help you not only finding and negotiating the property, but also help you discovering those hidden risks that can after your investment in the future. 

At Casablanca we specialize exclusively in Selling Triple Net properties nationwide USA. We have the knowledge, experience and expertise to assist you and guide you along the way, from market research, identifying potential properties, evaluate and negotiating them, due diligence, up to the closing table. 

We have helped many Triple Net Buyers and 1031 Exchange Investors in finding and negotiating the best NNN property according to their investment goals and risk tolerance. Moreover, we represent our Buyers for Free since we get paid from the seller, so you get our expert advice and representation at no additional cost to you. In addition, we pay for our Buyers closing costs up to a maximum of $10,000. We are the Brokers that gives you more. 

If you have any questions feel free to contact me directly at 407-205-7570 or you can also email me at [email protected]. Thank you so much for watching this video and I’m looking forward to speaking with you.