Advantages of Triple Net Lease Types of Real Estate Versus Multifamily Real Estate
As you begin down the serious journey of determining which type of real estate you want to invest in, you want to understand the benefits of each. Today we are going to talk about the triple net lease type of assets as compared to multifamily.
Triple net leases, often referred to as NNN, stands for net, net, net. In a NNN lease, all the taxes, insurance, and common area maintenance expenses (CAM) are passed along to the tenant. These types of leases are common in retail, office, and industrial.
Benefits of owning a property with a NNN lease vs Multifamily
- Leases are generally signed for multiple years in a NNN lease rather than on an annual basis which is common with multifamily. Which means on a regular basis you are advertising to fill the vacant unit in the multifamily property.
- NNN leases usually include negotiated rental increases. With multifamily the increase is essentially renegotiated at every annual renewal.
- Tenants in a NNN lease generally take care of all the expenses by direct bill or through payment of common area maintenance expenses.
- Income is easier to predict in a NNN lease scenario because the leases are multi-year and the increases are already agreed to and the expenses are mostly covered by the tenant.
- NNN properties are much closer to true passive income. With multifamily there is more tenant turnover, more tenant issues, and more tenant requested repairs.
That should get you started as you begin to think about the advantages of different investment opportunities.