what is one net, two net and tripple net?

In Buying Property - Asked by Jagdish P. - Dec 3, 2008
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Answer(s)

Eric W.
Broker/Agent
Carlsbad, CA

NNN, or a Triple Net Lease is where the tenant pays operating expenses, taxes and insurance, but beware the property owner may still be responsible for roof, structure and systems (rarely systems).
An Absolute NNN should mean the tenant covers everything.
N and NN are derivations therein. More than likely with an N, or Net Lease the tenant pays operating expenses.
Review the lease carefully to discover the real expense recovery.

Dec 4, 2008
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Mark and Paul B.
Broker/Agent
Pocatello, ID

In addition to Eric's answer, note that while there is such a thing as a NN, Single Net typically precludes the tenant paying for everything less insurance and property taxes, while triple net has tenant paying these in addition. However the terms are used very loosely in the industry and as a result, when some people say NNN, they mean N and most leases are actually modifed net leases, which is the common result of successful negotiations.
On a quick side note, NNN isn't always the best way to go. If you have a NNN tenant that isn't super strong, if they miss tax or insurance payments, you could be in a world of hurt as an owner. You also want to make sure your NNN tenant is the type that will properly maintain and care for the property. If they are a smaller tenant, I would recommend a modified single net lease that has the owner in charge of maintenance. Otherwise, you'll likely end up doing a bunch of delayed, more costly maintenance on the backend because the tenant failed to keep the property up properly and most lawsuits to recoup damages will end up costing more than just doing the repairs anyway. Just bump your lease rate and go with a gross or modified net unless you have a large national tenant or a business where upkeep is very important to them.

Dec 5, 2008
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