triple net lease owner and the lessee agree upon a
designates the tenant or lease document stipulating that
lessee as being solely the tenant bears the operating
responsible for bearing all the responsibility for the property.
costs related to the asset being In recent years the triple net
leased. The landlord and the lease has become increasingly
tenant come to an agreement where popular for leases of smaller
the tenant agrees to pay all properties. While there are many
taxes, insurance and versions, triple net typically
miscellaneous expenses on the includes Taxes, Insurance, and
property in addition to any Maintenance (TIM).
normal fees that are expected
under the agreement. The concept In a triple net lease, the rental
of Triple Net Lease has been very component is separately
popular in commercial building identifiable in the lease, making
leasing because it reduces the the actual net investment return
owner's need to worry about clear for property owners and
spending time and money for investors. Unfortunately there
monitoring property conditions are several pitfalls for the
and providing maintenance. smaller property owner in regards
to leaving the insurance of their
The basic idea of a net-net-net building to the tenant. The
lease is for the lessee to assume tenant may willfully damage the
responsibility for all property's property in order to claim
expenses, both fixed and insurance while experiencing
operating. The concept is well financial troubles. In such a
accepted and employed in all situation the owner will lose all
traditional sale-leaseback claim to the insurance and has no
transactions for long-term lease fall back to claim losses against
of larger properties. Both the the tenant.
wear, requiring maintenance and
Most triple net leases require eventual replacement. Some owners
the lessee or tenant to cover reduce their risk by establishing
costs to maintain the roofing, a reserve fund into which each
heating, etc.- practically tenant makes regular payments.
anything related to the building The owner then covers property
that can wear out or be damaged maintenance costs as needed from
during the lease period. If you this fund. As tenants come and
are in a triple net lease go, the maintenance fund is
agreement you will be excused of constantly replenished—with no
all property taxes and property surprise burdens for a single
insurance liabilities. You will tenant or for the owner.
be responsible for paying your
utilities directly. You can A triple-net lease via a 1031
budget your personnel expenses exchange allows the investor to
and costs for routine maintenance get even higher returns by
and secure a quote for a deferring his/her taxes and thus
maintenance contract. increasing the overall internal
rate of return. Various companies
There are a number of important provide you with a quality
issues to be considered before selection of triple-net leased
entering into a triple net lease properties that are ideal for
agreement, including cost of 1031 like-kind exchange
capital, future operating investments. It is believed all
performance and relationship with interests are best served by
the building. All parties in a regular inspections performed by
triple net lease arrangement need independent professionals with
protection against surprise extensive experience and
expenses that can occur as the expertise in evaluating and
facility ages and components reporting on building conditions.
About the Author:
Christine is an expert Internet marketing professional with years of experience in various industries such as: Business, Finance, Real Estate, Web-Design and many more.
Site: http://www.1031assistance.com/
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