Some Basic Benefits of a Triple Net Gateway Lease
Today, there is a popular property type in commercial real estate known as triple n (3N) or triple net, which are given to tenants with high credit ratings and which represent 3 net terms. The leased real estate taxes or tax net, insurance, and all properly maintenance, are now in the responsibility of the tenant.
Commercial properly owner would do well to invest in triple net deals since there is no management responsibility involved and you get better profitability without the associated headaches. Since the tenants they would get would be only those who qualify, they are assured of a long-term lease. With this type of lease, the property owner is assured of a stable net income and he does not need to worry about taxes and insurance of their leased real estate investment.
The tripe n arrangement seems to favor the property owner more and then tenant so it involves a higher risk to them. Nevertheless, this is not the case for retail and some industrial rentals because of various reasons which I hope to cite.
You have more control of the property for a retail and some industrial rentals like plumbing systems or roof repairs which can be passed without the approval of the property owner. In this arrangement, whenever it is necessary to have various fixtures either installed or repaired, the tenants are able to hire contractors or anyone to do the job. Of course, without violating its original novelty like putting substandard roofing system or anything that is critical to its long time serviceability. Tenants usually have the right to make small changes to the property, and operate independent of the property owner’s control. The lease, however, moderates this agreement which was signed by both parties prior to occupancy.
One of the biggest advantages of a triple net lease is that it usually has lower rents compared to gross rents. These lower rents can then absorb the lessee fluctuating operational expenses that is typical to the mark of a retail and some industrial rentals.
The Triple Net Gateway for tenant need quality risk management after identifying risk factors involved prior to signing the contract, so this means that one must be cautious in negotiating caps. You maximum liability amount is included in this which is on top of the basic rent amount that you pay each year. Keep in mind that you are liable for these extra expenses no matter how well or how poorly your business goes during the lease term. A proper application of this tripe net lease will actually benefit both the property owners and the tenant as well.