Property ownership is highly profitable, and you don’t want to be left behind. But there are some fundamental factors you must consider before committing your money to purchase. One of these factors is the type of lease associated with the property.
What Options Are Available?
The three options available are:
- Single Net
- Double Net
- Triple Net
Understand that there are three significantexpenses associated with properties. These are:
- i) Taxes to the local and/or national government
- ii) Insurance to cushion against unforeseen events
- iii) Maintenance costs to keep the property habitable and improve its standards
These are the three ‘nets’ in real estate terminology.
What Does It Mean for the Landlord and Tenant?
So, for single net properties, the tenant covers only one of these expenses, say taxes. Remember that’s on top of the monthly rent they pay.
For double net properties, on the other hand, the tenant is required to take care of two of the above-mentioned expenses, in addition to the monthly rent. For instance, the agreement may be that a tenant is responsible for taxes and insurance.
The triple net agreement is perhaps the best since the tenant agrees to pay taxes and insurance, as well as cover any maintenance costs. It’s the preferred lease type for retail stores, gas stations, restaurants, and suchlike businesses.
5 Reasons to Buy A Triple Net Property
With such facts, you can now see why it’s good not to hesitate whenever you see a triple net property for sale.
Here are five more reasons why triple net properties are a great option.
Little or No Owner Responsibilities
Once a tenant leases the property, they’ll be responsible for all maintenance needs for the property. You’ll never have to be contacted for minor repairs,as is characteristic of many properties out there.
In addition to that, the tenant is in charge of communicating with the relevant authorities regarding payment or non-payment of taxes. And the same is true for insurance premiums. There’s no more pressure on you to beat the usually tight deadlines.
Steady and Predictable Income
As an owner of a triple net property, you receive a flat rent on a monthly basis or any other agreed period. The entire rent goes into your pocket. You don’t have to allocate part of the rent to taxes, insurance, or other maintenance emergencies.
As such, you can forecast your rental income for one year or so and be able to make solid financial plans. This may prove a bit difficult if your net monthly income unpredictably fluctuates from month to month.
No Worrying About Vacancies
With short-term leases, the landlord is always worried about tenants vacating the property and leaving it vacant. If the location of the property and the time of the year aren’t in your favor, the property can remain empty for several months or even years. This means lost rental income for that period the property remains zero.
But with triple net property, the lease is typically long-term, usually for ten or more years. This gives you such peace of mind to know that your property isn’t falling vacant any time soon.
You Can Sell the Property Any Time
Suppose a moneyed buyer sets an eye on your property and declares interest, but the lease agreement hasn’t expired. With a triple net property, you don’t have to wait until the expiration date so that you transfer ownership of the building to another person.
You can immediately sell your property as long as the buyer agrees to maintain your initial agreement with the tenant. This way, you can significantly benefit when the right opportunity arises. And as the majority agree, opportunity knocks once at every man’s door.
Owning a triple net property is relatively uncomplicated in regardto accounting. All you receive is the rent, and you keep the whole amount.
If you were to receive the rent and then start making deductions for insurance, taxes, and a contingency fund for unforeseen maintenance needs, it would be mentally tasking for you or your accountant.
Have You Spotted A Triple Net Property for Sale?
In case you’ve spotted a triple net property for sale, you now have valid reasons to make the purchase decision. And once you have full ownership, look for a good tenant who can guaranteetimely payment of rent.
A good starting point is a nationally known corporation with regional franchises. Even if business takes some time to pick for your specific tenant, the parent company chips in to ensure that rent are paid in full and on time.