Advantages of Triple Net Gateway Lease to Tenants
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.
Suffice to say that these triple-net deals appear to be the perfect investment for the property owner since there is no management responsibility that is involved and therefore this is the best place to put their extra money with no headache and 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. This, however, is not the case for some retail and industrial rentals for many reasons which we will see below.
Is some ways it also benefits retail and industrial rentals since they can have full control of the property and they can do things like install plumbing systems or repair the roof without getting 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. Making small changes to the property is included in the tenants right which is not under the control of the property owner. However, the lease moderates this agreement that is signed prior to the tenant occupying the place.
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 tenants will require a kind of quality risk management after it has identified the risk factors that is involved prior to signing the contract which 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. When carried out correctly you will see that a triple net lease will not only benefit the property owner, it will also benefit the tenant.
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