Triple Net (NNN) Lease Investing 101 for Beginners: Everything You Need to Know in 2026

If you are interested in Buying a Triple Net Lease property, either now or in the future this video is for you. I am going to share with you the most comprehensive Triple Net Lease Investing guide for beginners. I will tell you everything that you need to know about Triple Net Lease Investing in 2026. And stay with me until the end because I’m going to give you a bonus tip, What are the Best NNN Properties to Buy in 2026.

To make your watching experience better, this video is organized into thirteen core topics. If you want to jump to a specific topic right away, you can access them through the chapters in the description of this video.

First and foremost, If you are going to remember one thing about this video remember this: A single Triple Net Lease Investment property is the best passive income alternative for NNN Investors beginners and 1031 Exchange investors as well. A Triple Net Lease structure is the purest form of passive income real estate investing, the tenant is responsible for pretty much everything, from property taxes, property and liability insurance, maintenance costs and capital improvements. No more clogged toilets or roof leaks calls, the tenant is responsible for all of that, and more important than anything, your passive income is net.

Hi, my name is Alex Casablanca, Managing Broker at Casablanca Commercial Real Estate. We are a boutique brokerage firm based in Orlando, Florida, specializing in selling NNN investment properties. We represent NNN buyers and 1031 exchange investors in finding and negotiating the best NNN property according to their investment goals and risk tolerance.

First, What is a Triple Net Lease?

In simple terms a Triple Net Lease is a specific lease structure in which the tenant, in addition to the base rent, is responsible for the payment of Property Taxes, Property & Liability Insurance and common area maintenance costs. And that’s where the concept of NNN comes from, your passive income is net out of the three core expenses that the owner is usually responsible for.

Beyond the traditional NNN lease concept, most single tenant Triple Net leases nowadays are structured as Absolute NNN Lease, which means that the tenant is also responsible for the building structure, parking lot and capital improvements in general, that’s what it is called Absolute NNN Lease.

What is the Main Advantage of Buying a NNN Lease Property?

There are two major advantages of investing in a NNN Lease property. First, it is a truly passive income investment, you buy the property and the tenant takes care of pretty much everything concerning the property, from property taxes, property and liability insurance, maintenance costs, capital improvements among others. You receive the rent either by mail or nowadays by electronic transfer and you don’t have to do anything else. The second advantage for a NNN buyer is that you are basically insulated from rising costs. In a normal rental, if the city raises property taxes or the insurance company raises your premiums, that money comes right out of your pocket. With a Triple Net lease, the tenant is responsible for all of those cost increases.

Who Are the Buyers?

The typical NNN buyer is a passive income investor—someone that is looking to receive a monthly rent payment without active involvement in the management of the property. In recent years, I have seen many Multifamily and Retail Multi Tenant investors transitioning into Triple Net properties. These investors are often tired of dealing with all the hassles of managing a residential or commercial property, such as constant tenant turnover and daily property maintenance.

I have also seen many retiring investors who are consolidating their investment portfolios into a long-term stable passive income cash flow with no landlord responsibilities, allowing them to enjoy their retirement without being “on call” for property emergencies.

And what are the types of Properties?

A Triple Net lease property could be either a Single Tenant, such as McDonalds, Walgreens, 7-Eleven, Dollar General, among many others), or it can also be a Multi Tenant building with 4 or 5 Tenants, or even a medical or industrial building. Technically, any commercial real estate investment property in which the tenant is responsible for paying the property taxes, insurance and maintenance costs, is a Triple Net lease.

However, not all Triple Net leases are created equal. The most popular type of property is the single tenant NNN lease, in which you only have to deal with one tenant, and that tenant pays for every cost concerning the property. The only thing that you have to do is to collect the monthly rent payment at the beginning of the month. It is the purest form of a passive income structure.

In the other asset classes, such as retail multi-tenant, office or industrial properties, the tenant still either pays or reimburse the landlord for property taxes, insurance and common area maintenance costs, but the landlord retains responsibility for the roof, structure and capital improvements.

One important aspect to highlight is that there are multiple variations within the NNN Lease structures, in which the Landlord involvement could vary. Every lease is structured in its own unique way according to the particular negotiations between the landlord and the tenant at the time the lease was signed.

And what are the typical lease terms?

To complement the passive income structure, leases are typically structured for longer terms ranging from 10 to 20 years, and they also include rental increases either annually or every 5 years, which offers a hedge for inflation as well. Most leases also come with automatic renewal options of 5 additional years each, so if at the end of the lease the tenant wants to stay they can continue extending the lease every 5 years for certain specific periods.

Who are the Tenants Behind Those NNN Leases?

The backbone of the Triple Net (NNN) market consists of Investment-Grade National Tenants—well known names such McDonalds, Walgreens, CVS, 7-Eleven, Dollar General, among others. These large corporations offer the highest level of security because the lease is backed by a financially strong company with a proven track record and successful business model. Consequently, these properties will come at a lower cap rate, because it’s a low risk investment.

Alternatively, a significant portion of the NNN landscape is fueled by Independent Franchisees. Most fast food restaurants, such as Wendy’s, Dunkin Donuts, Taco Bell, are owned and operated by independent franchisees, so the lease guarantor is the private franchisee group and not the global corporation. There are “multi-unit” franchisee operators managing hundreds of locations to smaller, local entrepreneurs. While franchisee-backed leases generally offer higher cap rates due to the increased risk profile, the lease structure remains identical: the tenant assumes full responsibility for property taxes, insurance, and all maintenance costs, protecting the landlord from the rising expenses of property ownership.

What is the return or the cap rate that I can expect from those NNN Leases?

Like in any other type of investment, the cap rate is in direct correlation to the level of risk involved in a particular transaction. The basic concept of investment of “The higher the yield, the higher the risk; and the lower the yield the lower the risk”, also applies to NNN Properties. The better the area, the stronger the tenant, and the longer the lease, the lower the cap rate will be.

NNN Lease properties located in Top Retail Markets, in strategic locations with strong demographics and with a strong credit rated Tenant guaranteeing the lease, such as McDonalds or Chipotle are going to come up at lower cap rate, because the risk is lower. For those types of low risk investment the cap rates could range from the mid’s 4% to low’s 5%. However, Tenants in which the perceived risk is higher such as Dollar General, Walgreens, CVS, Cannabis facilities, small franchisee operators, among others, the cap rate is going to be higher, because the implied risk is higher. Also, properties in which there are less than 5 years remaining on the base term of the lease the cap rates are going to be higher because the implied risk is also higher. Properties within that risk profile could range from 6% to even 9% in some cases.

With respect to cap rates, the key concept is simple: The higher the cap rate, the higher the risk; and the lower the cap rate, the lower the risk. Every investor has a different level of risk tolerance, some investors are conservative investors and are willing to accept a lower cap rate in exchange of a lower risk; and there are other investors that are risk takers, and they don’t mind assuming a higher level of risk in exchange for a higher cap rate. As an investor you have to determine your risk tolerance and then set your cap rate expectations according to the level of risk that you are willing to assume.

The 1031 Exchange Advantage with NNN Properties

A Triple Net property is often the absolute best alternative as a replacement property for your 1031 Exchange. It represents the purest form of passive income because the tenant is responsible for almost every major expense. This allows you to transition from being a heavily involved, hands-on landlord to a truly passive investor relatively easily. Instead of managing day-to-day operations, you simply receive a net rental payment, making it the ultimate exit strategy for those looking to step back from active management.

One of the biggest hurdles in a 1031 Exchange is the strict IRS deadline for identifying and closing on a new property. The acquisition and due diligence process for a NNN property is significantly simpler than it is for an apartment building or a multi-tenant retail center. The core of your research is the lease agreement, which is the most important piece of the puzzle. Since the tenant is responsible for the building’s condition and all operating costs, you can often avoid the lengthy and expensive inspections that typically delay a closing. This simplicity of a NNN transaction makes it much easier to meet those tight IRS guidelines.

The number one concern for 1031 investors is not being able to identify and close on a replacement property within the deadlines that the IRS imposes, and then being stuck with a massive capital gain tax bill. Fortunately, the inventory of NNN properties is consistently ample. Whether you are looking for a specific brand name or a certain price point, there are usually plenty of alternatives available to ensure you find a replacement property before your time runs out.

Finally, if you have owned your current property for more than 10 years, you have likely depreciated it substantially, which lowers your cost basis. Selling without a 1031 Exchange would trigger a huge capital gain tax bill, wiping away a significant portion of your wealth. By rolling that equity into a NNN property, you defer those taxes and keep 100% of your money working for you.

What Are the Risks of Buying a NNN Property and How Do You Mitigate Them?

Although buying a NNN property offers singular benefits to investors and can be considered a passive and low risk investment, they are not exempt from major risks that must be identified, and most importantly, determining if those risks can be mitigated in any way. Let’s review the top two major risks or concerns that I receive from my clients.

The Risk of Vacancy or Non-Renewal

The biggest question I get from my clients is: “What happens if the tenant leaves or not renew the lease?” There are several alternatives if that happens. The first alternative is finding another tenant that can occupy the property. And that’s when real estate fundamentals come into play. Before buying the property you have to make sure that it is located in a prime location, with strong demographics, high population growth, high average daily traffic, and preferably in an area that is in expansion. If the property is in a strategic location with strong real estate fundamentals that will increase the Tenant’s probability of success in that location, therefore they will want to stay there for the long term. In addition, if you might need to bring another tenant, the probability of replacing the original rent is certainly higher.

2. The risk that the tenant might go bankrupt and will be forced to close operations and stop paying the rent.

A recent example of that situation is Red Lobster. Red Lobster, although a well known brand name and beloved by the majority of their customers, they were heavily indebted and they didn’t have any other choice but to go bankrupt. As a result, they were forced to close a significant number of their locations.

Certainly this is a risk that is totally out of your control, but what can you do to mitigate that risk in some sort of way?

First, do extensive research on the Tenant’s and brand name performance. If it is a Corporate Lease from a publicly traded company, such as Walgreens, Chipotle, Dollar General, among others, there is extensive public information about the financial stability of that particular company. If it is a franchisee it is a little bit tricky, because those are private companies, and the information that they provide cannot be verified. But you can still inquire about how many locations they have, look for recent news on the company, request the tenant’s financials if they are available, and even visit the property to see how they maintain the location.

It is important to highlight that there are obviously other risks involved in buying a NNN Property not mentioned in this Beginners guide video, so it is important that you do your own research and your own due diligence. However, if you want to know more about other risks involved you can watch this video here that provides a more comprehensive analysis of the risks involved.

What are the Best NNN Properties to Buy?

This is the most common question I hear from 1031 Exchange investors. The answer is simpler than you might think: The best NNN properties are those where the tenant provides an essential and irreplaceable product or service to the consumer. As we all know, technology has created drastic changes in consumer spending and behavior. Nowadays we can buy pretty much anything on Amazon, so it is very important to focus your search on brands that can be considered “Amazon-proof.” Think about the basic necessities we have as a society: Food, Shelter, Health Care, and Transportation. These are things you cannot buy in Amazon, neither now, nor in the foreseeable future.

Here are the top five categories that provide those essential services:

Fast Food and Coffee Shops

This is the preferred segment for most NNN investors. Within the context of Food as a primary necessity, fast food restaurants provide that necessity quickly, with maximum convenience and efficiency. Coffee, although not a primary necessity, most of us cannot live without our cup of coffee in the morning.

Nowadays, you can order your food or coffee from your phone, and you can even get it delivered to your door. During the Covid 19 pandemic, most fast foods restaurants remained open and continued operating through the drive-thru, and continued making the monthly payments without disruptions.

Top Recommendations on that segment: McDonald’s, Chick-fil-A, Chipotle, Raising Cane’s, Taco Bell, Wendy’s, among others.

For Coffee: You can consider Starbucks, Dutch Bros, and Dunkin’.

Medical and Healthcare Facilities

With the current medical advances and new medications people are living longer increasing the need of medical care. Particularly, Urgent and Primary Care facilities are in the first line of necessity and accessibility for the consumer when they have an immediate medical need. Dialysis centers are in the 2nd layer of medical necessities but are also an excellent investment alternative. There are several well known and established medical care companies such as Davila, Fresenius, Med Express, Well Now, Fast Pace Urgent Care, among others.

Drugstores and Pharmacies

Pharmacies are also in that “first layer” of necessity. Since the pandemic, they’ve transitioned into providing more primary care services like vaccinations and lab tests. Even as they experiment with smaller footprints to deliver prescriptions faster, the physical location remains vital. Key Tenants on that segment are Walgreens and CVS (both are investment-grade with solid reputations). However, you have to analyze each property carefully because both Walgreens and CVS are transitioning into smaller buildings, and some old properties might not be worth your investment.

Gas Stations and Convenience Stores

Gas is a primary necessity you’ll never buy on Amazon. Most modern stations now feature state-of-the-art convenience stores for snacks and groceries. Even with the rise of Electric Vehicles, these brands are adapting by installing charging stations.

Key Tenants: 7-Eleven, Wawa, Circle K, and RaceTrac.

Dollar Stores

Dollar Stores are also in the first layer of necessity for the consumer. They continued operating successfully during the pandemic even with the global supply change complications. Nowadays, Dollar Stores are transitioning into the grocery market concept, in which they also sell groceries of primary necessity such as milk, fruits, vegetables, chicken and seafood. The top two Dollar Stores are Dollar General and Dollar Tree, both are Investment Grade Tenants and Fortune 500 companies, with a strong business concept and solid track record.

Key Tenants: Dollar General and Dollar Tree

In summary, the Top 5 Best NNN Properties to Buy are:

Fast Food and Coffee Shops
Medical and Primary Care Facilities
Pharmacies and Drugstores
Gas Stations and Convenience Stores
Dollar Stores

The key is choosing a Tenant that provides an essential and irreplaceable product or service to the consumer.

What are the Best States or the Best Location to Buy a NNN Property?

That’s a very common question from investors, and most investors start by looking for properties that are in their local state or close to where they live. So, bear with me on this first: “The Best NNN property is not the one closest to where you live; the Best NNN property is the one with the best location, the strongest tenant, the best demographics, and the best real estate fundamentals in general”.

Beyond that broad concept I am going to give you some guidelines. First, most investors prefer to invest in NNN properties that are located in the so-called “Tax Free States”, in which the passive income is not subject to state income taxes. There are seven tax free states that offer a variation of no state income tax. Both Florida and Texas are the preferred states to invest among NNN investors as they both have a strong economy, strong population growth and a business friendly environment.

Focus on Growth Markets in General

While tax-free states are great, you can find a great NNN property in almost any state as long as you make sure that the real estate fundamentals are strong. Look for:

High-traffic corners near major highway exits.
Proximity to “Anchor” tenants like Walmart, Target, or Home Depot.
Strong Population Growth (areas where people are moving to, not moving from).

If you live in a high-tax state like California or New York, investing in a tax-free state like Florida is one of the most effective ways to protect your investment from high state taxes.

What are the financing options available?

Yes, there are financing options from national and local banks, and there are also mortgage brokers that have access to multiple lenders. However, financing should be used wisely and conservatively, and I am going to explain to you. A Triple Net Lease property is a passive income investment, in which the tenant takes care of pretty much everything and your rental income is net. As a result of that fact, the cap rates of NNN Lease properties are going to be lower than a traditional commercial real estate investment property.

Therefore, if you buy a property with a high leverage Loan to Value, like 80% mortgage and 20% down payment, the cap rate will simply not sustain a high leverage financing structure, especially in the current interest rate environment, in which commercial mortgages are still in the 6% and above threshold. In a high leverage structure like that the cash flow numbers are not going to add up, the majority of the rental income will go towards paying the mortgage.

If you are considering buying a NNN property with financing, you should not leverage more than 50%, and even leveraging only 50% you might still be in a position in which most of your rental income will go towards paying the mortgage, leaving you with not enough passive income return.

What are the next steps that I have to take to Buy a NNN Property, and How I can get access to those properties:

I am going to give you 3 simple steps to start the right way:

First you are going to start by defining your Risk Tolerance and Investment strategy. You have to define yourself as an investor. Are you more of a conservative investor that wants to buy a property with the lowest risk possible, or are you willing to take an additional level of risk in exchange for a higher return. Every investor has a different level of risk tolerance, some investors are conservative, while others are risk takers. None of them are right or wrong, it all depends on your own particular situation and risk tolerance. The goal is to define the level of risk that you are willing to assume, and then set your cap rate expectations accordingly. Remember the key concept, the higher the cap rate, the higher risk, and the lower the cap rate, the lower the risk.That will determine the next steps.
Then, the second step is Define Your Investment Criteria. In other words, know exactly what you are looking for. And here is a simple of example: “Alex, I am looking for a fast food restaurant property at a price range between $2M – $2.5M, located in a Tax Free State, with a Cap Rate of 6% or higher, and with at least 10 years remaining on the lease”
And then, once you have defined those two important core steps, hire a knowledgeable and experienced NNN Buyer’s Broker with access to national NNN listings. Your Buyer’s Broker will be your strategic partner and will help you navigate the complexities of the market. If you call the Seller’s broker directly, their job is to get the highest price and best terms for the seller, so they aren’t going to highlight the negative details or potential risks of a property. Your Broker will be able to dissect those hidden details on behalf of you that could make a great impact in your investment. Your Buyer’s Broker is like your Attorney, by no means you will allow the Seller’s attorney to represent you, you hire your own attorney, right? Well, it is the same with your Buyer’s Broker.

In summary, buying a single tenant triple net property is the best real estate investment option for both NNN Buyers and 1031 Exchange investors that are looking for a replacement property. A triple net investment property is the purest form of passive income real estate investment, the tenant is responsible for property taxes, insurance, maintenance costs, and in some cases capital improvements as well, so your rental income is net, yes net, and without headaches.

At Casablanca, we specialize in representing NNN Lease Buyers and 1031 Exchange Investors. We have the knowledge and expertise to guide you along the way from market research, identifying potential properties, submitting offers and negotiating them, due diligence, up to the closing table. We have helped many NNN Buyers and 1031 Exchange Investors in finding and negotiating the best property according to their investment goals and risk tolerance.

Moreover, we represent our Buyer’s for Free since we get paid from the Seller, and we also offer our Buyers up to $10K credit towards the Buyer’s closing costs. This incentive will offset or cover completely the major Buyer’s closing costs expenses such as Title Fees, Attorney Fees, Recording Fees, among others. We are the Brokers that give you more in exchange for your trust.

If you have any questions or need guidance with your upcoming NNN Lease property acquisition, feel free to contact me directly and I will be in contact with you. Please also subscribe to our email list by scanning the QR Code on the screen and we will send you our weekly Top 50 NNN Properties for Sale.

Well, you got all the way to the end in this video, so thank you very much for watching this video, and if you found it helpful please give it a like and consider subscribing to the channel for more videos about NNN lease properties.

If you want to know more about Triple Net Lease Investing, the video playlist here offers a comprehensive guide on how to Buy a NNN Property. Thank you very much for watching this video and I’m looking forward to being your broker in your next NNN property acquisition. Have a great day!

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Why Choosing to Work with Us as Your Buyer’s Broker?

We represent our Buyers for Free, so you get our expert advice at no additional cost to you.
Up to $10,000 credit towards Buyer’s Closing Costs.
We specialize in representing Triple Net (NNN) Buyers and 1031 Exchange Investors. We represent your interests as a Buyer exclusively, not the Seller.
We have comprehensive knowledge of the triple net market.
Extensive access to any property on or off the market nationwide.
Our main goal is to find the best property for you at the best price.

Up to $10K Credit for Buyer’s Closing Costs

Read Our Full YouTube Videos Legal Disclaimer Here

Legal Disclaimer: Nothing contained in this video and written article should be interpreted as a recommendation or endorsement to purchase, sell, or invest in any specific property or security. The opinions expressed in this video by Alejandro (Alex) Casablanca are personal opinions based on experience as a practicing Licensed Real Estate Broker in Florida, and they do not constitute investment advice nor recommendations to buy or sell any property. Viewers should not rely on any statement made in this video and written article as a guarantee or representation that any particular property or investment strategy is a suitable investment. Opinions expressed in this video and written article are based on information available at the time of recording and are subject to change without notice. Prospective investors must conduct their own independent due diligence and consult with licensed financial, legal, and tax professionals prior to making any investment decision. Investment decisions should be based solely on each individual’s financial circumstances, objectives, and risk tolerance. The Triple Net real estate market is constantly changing and evolving. Changes in tenant financial condition, market conditions, demographics, technological innovation, monetary policy, consumer behavior, and broader economic trends may materially impact property value and performance. A tenant considered strong at the time of recording may experience financial distress in the future, which could adversely affect your investment. Neither Alejandro Casablanca nor Casablanca Commercial Real Estate LLC provide investment advice or assume any liability nor responsibility for any investment decisions made by viewers. For more information, read our YouTube Videos Legal Disclaimer here.