Triple Net Investments LLC    

NET LEASED INVESTMENT PROPERTIES

DEFINITION:  A net leased investment property is one that is owned by an investor, then leased by a user for an extended period of time - usually 10 to 20 years or more.  

In most of these leases, the tenant is responsible for all maintenance of the property, all taxes and assessments, and all insurance = NNN.  Sometimes the landlord may retain responsibility for the roof, bearing walls, and foundation = NN.  Of course, there are endless variations on this theme, but these are the main categories.

The tenant gains several advantages by leasing the property rather than owning it:

• Significantly reduced up-front cash requirement.

• The entire lease payment is deductible for income tax purposes.

• Tenant usually makes a much larger return by investing his cash into his business and expansion than in owning real estate.

• Tenant may expand into additional locations at a much faster rate.

• The mortgage on the property would negatively affect the tenant's balance sheet if he were the owner/borrower.

• Reduced liabilities on the tenant's balance sheet, will positively affect their credit rating, thus reduce their cost of borrowing for other purposes.

The landlord enjoys many benefits from owning a net leased investment property:

• A regular and assured stream of payments (depending upon the credit worthiness of the tenant) generally, with scheduled increases over the life of the lease and its exercised options.

• Depreciation deduction from taxable income.

• Requires little or no time on the part of the landlord.

• Receives all of the benefit of appreciation over the life of the property.

• Achieves significantly higher return than would be available from many other investments.