How Does The Rental Income Work With Triple Net Leases?
Triple Net Leases (NNN leases) are a type of commercial lease agreement in which the tenant is responsible for paying the property's operating expenses in addition to the rent. The operating expenses typically include property taxes, insurance, and maintenance costs.
Under a Triple Net Lease, the tenant is responsible for paying the rent, as well as all operating expenses related to the property. This means that the landlord does not have to pay for any of these expenses, as the tenant is responsible for them.
The rental income generated from a Triple Net Lease is typically higher than a traditional lease because the tenant is responsible for paying the operating expenses. This means that the landlord can expect to receive a higher net rental income from the property.
For example, if a landlord owns a commercial property and rents it out on a Triple Net Lease to a tenant for $10,000 per month, the tenant would be responsible for paying the property taxes, insurance, and maintenance costs, in addition to the rent. If the operating expenses for the property are $2,000 per month, the landlord would receive a net rental income of $8,000 per month.
Overall, Triple Net Leases can be beneficial for both landlords and tenants, as they provide a clear understanding of who is responsible for paying for the property's operating expenses, and can lead to higher net rental income for the landlord.
We'd love to guide you through the 1031 process, let us know how we can help!