Types of NNN Leases
NNN or NN Seriously? Whats the Difference?
You are considering trading out of your residential rental investment and using the IRS 1031 Exchange to defer your capital gains taxes. The Net Leased Investment is one of the best ways to do this. Many people have heard of the Triple Net or NNN investments.
You should be aware that some properties that are presented as a Triple Net are in fact a Double Net. What does this mean? Well, you might have some landlord responsibilities. It may not be a big deal or it can be a very big consideration. Some of the more common landlord responsibilities are roof and structure. If the building is new and has a new roof with a warranty this may not be a big deal. If the property is older and the roof has not been replaced in a long time, and you’re lease calls for the roof to be replaced by the landlord, you need to take a closer look at the opportunity.
Sometimes the landlords is responsible for the parking lot. This can get pricey if it is in an area that gets a lot of snow. Snow plows really tear up a lot. Sunny locations get problems too. The sun can really wear out the black top. Sealing and striping can add several thousand dollars a year to the budget. These are just a couple of examples.
The bottom line is a double net lease may not be a bad deal. You just need to really take a close look at the lease to see what you are responsible for.
Beaubien Investment Group can help you find a net leased investment that meets your needs. Call Will Beaubien at 415–218–7936.