In the past few years, triple net or NNN leases have become a huge sensation in the business world. Entrepreneurs are looking at it as a hassle-free way to establish their business infrastructure.
But what exactly is triple net or NNN leases?
For those who don’t know, in this type of commercial lease, the tenant is responsible for the rental’s insurance, maintenance, and real estate taxes. Because the tenant is paying all these extra costs and overhead expenses, the overall rent is comparatively lower than a single or double net lease.
How is it a good idea?
The best part of triple net leases is that it offers a lot of benefits not only for the tenants but also for the landlords. Tenants have the freedom to customize their space according to their needs without a hefty capital investment. In fact, such leases are much more flexible than their counterparts as the terms and conditions regarding tax and insurance can be adjusted according to the tenant’s needs and market fluctuations.
On the other hand, these leases offer a steady and reliable income for the landlords without having to worry about paying hefty overhead costs. If you want to know how technology can help both renters and homeowners, you can find more here about the software you can use.
The best part is that in many nnn properties for sale, the landlord doesn’t necessarily have to play an important or active role as a property manager. However, landlords might still be held responsible for roof, structural, and parking lot maintenance.
Now, the burning question is, how are NNN leases calculated? Well, that’s what we are going to talk about in the rest of the article. Stay put for more information about the lease calculation.
● Calculating NNN lease for one tenant.
The entire calculation process gets streamlined when the whole building is leased to only one tenant.
These leases are often calculated on the basis of per square footage rented by a tenant.
The amount is also calculated by taking into consideration the yearly taxes, insurance, and maintenance cost and dividing the total amount by the total rental footage.
● Calculating NNN lease for multiple tenants
There are certain things to keep in mind while calculating the triple net leases for multiple tenants. And here’s a list of expenses to take into consideration.
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- Take into account the upkeep of shared units such as parking spaces, bathrooms, hallways, and building lobby.
- Determine the annual costs for utilities, cleaning, necessary repairs/supplies.
- Figure the cost of any helping staff, if needed.
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Once you are done with that, add all the additional costs and divide the amount by the total rental square footage.
This way, you’ll be able to calculate the individual NNN lease amount fairly amongst all the tenants.
PS: With the annual tax fluctuation in the real estate market, it is the duty of the landlord to provide a full-fledged tax statement to all the tenants.
To sum it all up,
The triple net lease is a really good idea when the entrepreneurs wish to take control over all their finances. So, now that you know all about NNN leases and how they are calculated, wouldn’t you love that your business as well?