1. NNN is short for triple net lease.
You may have seen “nnn” or “NNN” floating around commercial real estate listings. This is industry speak for “triple net lease.”
2. The tenant pays taxes, insurance, and maintenance in addition to rent in a triple net lease.
Most people are familiar with a lease where the tenant pays rent, and the landlord takes care of pretty much everything else. NNN leases are different. The tenant pays rent plus the three “nets” – taxes, insurance, and maintenance – in a NNN lease.
3. There’s a pretty good chance the Walgreens around the corner from you is a NNN lease.
NNN leases tend to attract well-established, high-credit tenants such as Walgreens and Starbucks.
4. NNN leases aren’t completely passive.
As we pointed out here, one of the attractions of a NNN lease is passivity. However, it’s hard to envision any property being completely passive, and NNN properties are no exception. Our article here explains more about how management companies help protect NNN investments.
5. Cap rates play a critical role in determining investment value.
Investors often look at the cap rate of an asset when determining its investment value. Cap rate is expressed by this ratio: Capitalization Rate = Net Operating Income / Asset Value (or Purchase Price).
We covered cap rates in greater detail here.