NNN Lease Your Way to Wealth?!

Triple N leases aren't common because of the requirements for both the landlord and for the tenant. NNN leases require the landlord to cover the cost to "build to suit" or make concessions, and the tenant has to have a strong than strong credit rating with cash reserves and operating income "in excess" to cover all actual and presumed costs. When I was an operations manager for a midsize management company we sought nnn tenants for our spaces, and as an underwriter of the agreements we looked at 5 years of operating income and expenses, required cash reserves for anything smaller than a B corp, and had some large step-ups written into lease agreements; not to mention the 10,15,20 year lease agreements. Owners looking for NNN lease terms must have a property on a Main Street with heavy foot traffic, preferably corner, and a building that can accommodate pass-thrutraffic without major alterations to property structure and foundation work. There a lot to consider when looking for a NNN tenant; the main thing is ROI. Good topic!

Pretty interesting topic. I normally go to various real estate meetings and groups and rarely hear anything about NNN Leases. I don't know much about them but seems like a self sustaining way to obtain passive income. Maybe NNN is more for investors who have several consistent partners who joint venture together with a lot of capital? Receiving funding for commercial properties in my understanding seems more difficult to obtain than your average-Joe residential mortgage. Also, requires a more hefty down payment but that's dependent upon the property. Who are the primary targets for NNN leases, small businesses or tenants? If I were a business, there's different types of leases associated to monthly gross income so maybe this would be ideal for businesses having to just pay for taxes/expenses on the building and maintain their own space instead of have to pay a percentage based on their income every month. However, if I were a tenant in an apartment, I'm not sure if I would be willing to maintain the complex if I will not own the property hence why people rent in the first place. They are normally relieved of that duty and the ownership lies with the landlord. Most people do have to pay utilities based on the lease, but maybe it's just less incentive for tenants. I guess it's really dependent upon what you write the lease up as and if you think tenants will be willing to maintain the building for you without any benefit geared to them. I wouldn't want to maintain if I don't have to but I I think the gray area is what you mean by them "maintaining the property". In all leases I would have them regularly keep their unit clean and in accordance with set expectations. If you're talking about a roof replacement or capital expenditures, as a tenant, I definitely wouldn't want to be liable for that. Seems like this is more geared towards businesses. Again, I'm not an expert but very interesting topic. Would be something I'll have to look into more. Cheers...