馃攳
Triple Net Lease | Definition | Types | Benefits of NNN Lease - YouTube
Channel: WallStreetMojo
[11]
hello everyone hi welcome back to the
channel of WallStreetmojo watch the
[16]
video till the end and if you're new to
this channel then you can subscribe us
[21]
by clicking the bell icon today we have
a topic with us is triple net lease now
[26]
what exactly this is all about we'll try
and understand the word triple net lease
[30]
the one which we don't hear very
frequent that's why this topic has been
[35]
taken see a triple net lease I'll just
write what is first a triple net lease
[42]
okay so it doesn't know one of the lease
agreements between a lessor and the
[49]
lessee and lessee and about any
particular property whether lessee will
[58]
be responsible for paying the property
taxes for that assets the insurance
[63]
amount and also any repairs required for
the particular asset during the least
[67]
since the tenant or what we call as over
your lessee since over here the lessee
[73]
is paying everything that the lessor is
actually responsible for women in a
[77]
triple net lease the rent of the
property is usually much lower because
[83]
of this particular reason and then the
amount of the normal lease agreement
[86]
where the taxes insurance and
maintenance they have been paid by the
[90]
owner of the property is also referred
as net net lease that's called NNN
[96]
ok NNN least due to a peculiar
nature and its amount is calculated by
[100]
using capitalization cap rate which is
also known as the cap rate and this rate
[105]
depends on the creditworthiness of the
particular lease now there are type of
[110]
lease what are the type of lease see
there are three kind of read net lease
[113]
as you can perceive the triple net lease
is the most unique among all and let's
[120]
have a look at three different type of
variation in the net lease first there
[124]
is a thing called a single net lease now
in this type of net lease the tenant of
[129]
the lessee has to pay the property taxes
along with the amount of the lease the
[132]
tenant has to be okay now since a tenant
is paying only one additional payment
[138]
along with the lease amount it's called
the single net lease can you have that's
[143]
called double net
please in this type of net lease the
[146]
tenant needs to pay the property taxes
and the building insurance he pays the
[153]
taxes and the building insurance along
with the rent or the lease amount of the
[159]
property and since the tenant is paying
there are two type of expenses along
[163]
with the lease amount we call it as the
double net lease no there is a third
[169]
type that's called triple net lease now
what is see as you already know in case of
[177]
this net lease the tenant has to pay
three separate payments okay he has to
[185]
make make a 3 separate payments for
taxes insurance and also the maintenance
[194]
expenses that's required during the
duration mention in the agreement now
[198]
what about the investment in triple net
lease it is a great investment
[201]
instrument but it's beneficial when the
investor follows few rules or protocols
[207]
let's have a look at few rules that can
make the triple net lease investment
[211]
beneficial first is when it's done in
the portfolio as a portfolio if the
[218]
investor can create a portfolio of the
3 or 4 commercial property and he
[222]
can he or she can put them on a triple
net lease the investor gets a lot of
[225]
benefits firstly the investor does not
need to worry about the maintenance
[230]
taxes insurance and everything is taken
care of and at the same time the
[236]
investor receives a good return on their
investment second when it's done for
[242]
quite a long time so since the lease
amount is less than the least amount is
[249]
less than the net lease unless it's done
for at least 10 to 15 years it
[255]
won't be beneficial going for a triple
net lease helps the investors get
[259]
reasonable return for a very long term
without any worry or sort of an anxiety
[264]
third there is built-in rent
escalation though it's obvious in any
[270]
lease agreement still the investor needs
to make sure that the built in
[274]
rent escalation clause is included
in the agreement it means
[278]
every year the investor would be would
get and what we call as increment in the
[283]
lease amount and as a result there's no
worries about the return and the
[287]
investor would get more return every
year let's consider the benefits part of
[292]
the triple net lease for the investor
see there are a couple of eligibility
[296]
criteria that the investor has to have
to use a triple net lease for their
[300]
property the first point is the investor
should have the net worth of 1 million
[309]
that - without including the primary
residence
[313]
she owns or he or she owns or the
investor should have an income of 2,00,000
[320]
or closely 3,00,000 dollars if you are
applying as a joint fellow the second
[325]
point is let's say that you are a small
investor and you don't have the
[330]
prescribed income or the net worth can
you go for the net triple lease the
[337]
answer is yes but it is subject to
criteria area those participating this kind
[342]
of net leased a smaller investor the
smaller investor should invest in real
[349]
estate investment REITS reads that
concentrates on the similar property in
[354]
the portfolio of the investor now what
benefits the lessee would get what
[365]
benefits they receive will yet see the
bigger question is why the lessee would
[370]
agree to such a lease that offers the
lessor so many benefits why she does the
[375]
lessee not warn the benefits from the
less lease - the answer is yes and the
[382]
less he also gets the benefit in the
triple since the lessor does not need
[386]
to pay the insurance taxes and
maintenance the lessee does not need to
[390]
pay to do much rent for the properties
he or she takes so as a result leasee
[394]
can save a lot of money on rent by
agreeing to go for such least however
[399]
this is only you only benefit a leasee
gets from the triple net by release if
[403]
you have in term like turnkey okay this
kind of toner have you ever heard C in
[409]
in your lease agreement the chances are
they're the
[411]
even is triple net it okay and as lessee
the expenses may exceed the benefit you
[417]
receive so be aware before you sign up
for 10 to 15 years of triple lease triple
[423]
net lease agreement but now my finally
conclusion on this that you know are
[427]
triple net lease is a beneficial but
it's important in which you know which
[431]
side you are it like if you are acting
if you are acting as a lessor and going
[436]
for this net lease then it would be
beneficial for you but if you're
[438]
accepting it as lessee then it's better
to avoid because the benefits you would
[444]
get is lower compared to the payment or
you need to pay so you might think that
[448]
you are only paying three kinds of
payment and a smaller amount of rent but
[453]
realize that at the end of every year
the rent would increase as for thee for
[458]
what we call as the market rate right
and as a result you would need to pay
[463]
more money for the next 10 to 15 years
for the properties you rent as as a
[469]
lessee you better award triple net lease
and go for normal lease take a help of a
[474]
repeater attorney whenever you go to
sign the net lease agreement that's it
[478]
for this particular topic if you have
learned and you know liked the video if
[483]
you think that you know if you have
enjoyed and learned watching this video
[487]
please like comment on this video and
subscribe to our channel for all the
[490]
latest updates thank you everyone
Cheers
Most Recent Videos:
You can go back to the homepage right here: Homepage