Tax amount and sf are public record, but what about maintenance and insurance? Is 3x taxes a reasonable 3N?

In Leasing Property - Asked by Pat K. - Jan 3, 2011
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Rob B.
Chandler, AZ

Pat....
Maintenance and insurance is not a public record. However, if you are in a triple net lease, you are certainly entitled to full disclosure from your landlord on maintenance and insurance. In fact this information should be supplied to you prior to signing an NNN lease. With regard to your question "Is 3x taxes a reasonable 3N". This question is a bit confusing. However, if you are saying "Is it proper for a landlord to charge 3x taxes as one of the nets”, the answer is a loud NO! The landlord should supply you with an actual copy of the tax bill if you request it. The pass through on taxes should be no more than your proportionate share of the total bill. It is my judgment that you are entitled to have the landlord provide proof annually of all costs passed through on the triple net, unless the lease is phrased in a way where it provides a base rental amount, with an additional charge of "x" as a contribution toward operating costs. Check with your attorney on all legal questions with your lease, prior to signing it.
Good luck Pat........ Rob Baird, CA RE License #544165 (One of the oldest, active licenses in CA) 951 515-5855 Email: rob@capratecommercial.com

Jan 3, 2011
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Chris R.
Broker/Agent
Denton, TX

Any landlord should provide figures as to the breakdown of each of the N in 3N....
3x tax for any of the N is not correct. We have a property - Denton, TX - with a NNN of 6. Insurance is around $0.40/SF/YR. Taxes are around $1.50/SF/Yr. Maintenance comprises the rest of the NNN. Each property will vary and will vary greatly from state to state. You can also search Loop Net and find surrounding properties offering to lease space on a NNN basis that quote the NNN figure or will advise upon asking in order to compare. If you Landlord won't divulge or breakdown - he may be hiding something - be careful.

Jan 10, 2011
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David A.
Broker/Agent
Atlanta, GA

These questions are very specific to the asset in question. Maintenance costs on a 1 year old building are going to be vastly different from those on a 30 year old building. I've encountered major issues with NNN properties where the tenant has been content to watch the building deteriorate and the owner has been content to deposit a rent check and keep his eyes closed. If you're stepping into this deal as the new tenant, the historical maintenance costs may be a terrible indicator of future expenses.
If you're looking for general guidelines about various property types, consider the annual data published by BOMA.

Jan 10, 2011
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