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. In this arrangement, the tenant is responsible to pay the leased real estate taxes or tax net, insurance, and all property maintenance.
Commercial property owners should look at these triple net deals as the perfect investment since the management responsibility if given to the tenant and so this is the best place to put their extra money without headaches and with better profitability. Since the tenants they would get would be only those who qualify, they are assured of a long-term lease. This then also means having a stable net income and a unique measure to bypass taxes and insurance to shelter their leased real estate investment.
Tenants have a higher risk in this arrangement since the property owner is favored more than the tenant in this arrangement. However, there are various reasons which shows that for some retail and industrial rentals, this is not the case.
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. The tenants are able to hire contractors or anyone who can install or repair various fixtures which are necessary for their present needs. But tenants are limited in that the contractors that they hire should use quality materials and not substandard ones that would compromise the life of the fixture. Making small changes to the property is included in the tenants right which is not under the control of the property owner. The lease, however, moderates this agreement which was signed by both parties prior to occupancy.
Another benefit one gets from a triple net lease is the low rate of rental compared to gross rents. Since they have lower rents, they absorb the operational expenses type of retail and 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. What this includes is the maximum amount you are liable for over the basic rent amount 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.