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Gregory NNN…, Real Estate Pro in 94127

What is a NNN Triple Net Leased Investment?

Asked by Gregory NNN Commercial Garver, 94127 Sat Jul 10, 2010

What is a net-net-net or absolute triple net leased investment and how does it differ from a double net or NN investment? What are the pros and cons? What should I look out for or be aware of when buying one of these?

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The Trulia site is a place where people come to find property listings and information about their market where ever they may be. It is also a place where people can ask any question that pops into their head. Just as children keep asking "why" this is a great forum for the general public to enhance their knowledge. I don't always respond to postings unless I think I might add something to discussion and i do my best to be positive and informative. I hope that we can all be civil and courteous to each other. 



Gregory, I have found that in this ever changing market; the past norms are not the standard any more. Many things are negotiated in sale and lease agreements and what was cut and dry 10 years ago are negotiated differently today. That is actually one of the things that I love about real estate. There's never a dull moment and always an opportunity to learn something.



Who would have thunk 7 years ago where we are today? I do know this; it is an amazing time for a potential tenant looking to get into a commercial lease or purchase. There are amazing opportunities to negotiate a better deal today than 3, 5 or 7 years ago.

Good luck and please feel free to contact me directly if I can help you in any way. 



Herb Alston
Coldwell Banker
(415)341-8881
0 votes Thank Flag Link Sun Jul 11, 2010
Wow Jed Lane of Fog City, I am quite taken aback by your response (not to mention your lack of knowledge regarding the subject matter). To be perfectly candid I was trying to get a discussion going as to the different types of net leases as agents/people seem to throw the term "triple net" around rather loosely. In my opinion:
"Essentially a single tenant bondable lease (also known as a single tenant true triple net lease or a single tenant absolute triple net lease) is a lease in which there is one single tenant and this single tenant takes responsibility for every fathomable real estate risk related to the property and is responsible for every single property related expense.”
I have written articles on the topic, find one here:
http://activerain.com/blogsview/1738037/what-is-a-single-ten…
or here
http://www.trulia.com/blog/gregory_garver/2010/07/what_is_a_…


This comment is in response to Jed Lane of Fog City (company name goes to show his sentiments of our City)… as he will probably retract the comment below:

"Jed Lane; Fog City
Broker
San Francisco, CA

Come on Greg what's the story here?

This is hilarious. Gregory Garver lists himself as a Commercial Broker. If he in fact has a Brokers license and advertises himself as a "NNN Commercial Broker" he should know what a triple net lease is and the difference between a triple net, double net, net, or a gross lease.

For all the rest of the folks who might find this thread in the future the answer is every lease will vary. If I am working for the owner I want few to no expenses and a decent return. I am willing to trade some future expense for a higher return. If I represent the lesee I want the cheapest rent and the least exposure to unknown expenses. Does the tenant take responsibility for the roof lets say. Depends on how long he's going to be there and where is the breakdown of the monthly payment.

When buying an investment property one should look out for and be aware of everything. There are few disclosures and it's truely a buyer-beware transaction. Doing the due-diligence during the escrow period is key to knowing what you are buying. If you like to ride rough with agents that will skin you if possible go for it.

Every agent who has questions about terms should have a copy of Barron's Dictionary of Real Estate Terms and any agent that needs to ask a question like this should never represent a client in a transaction like this."
2 votes Thank Flag Link Sat Jul 10, 2010
Here you go, this two minute slide show should put investor or broker ahead of the game...

http://a-nnn.com

Say, you look kind of familiar...
Web Reference: http://nnnbrokersusa.com
0 votes Thank Flag Link Sat Jun 2, 2012
Net Lease 101 was created so that you can find the answers to some of your basic questions or ask a Calkain America's Net Lease company! No need to search all over the internet for you answers, leave it to the experts. http://www.calkain.com
0 votes Thank Flag Link Fri Mar 23, 2012
Having sold a lot of net leased properties, I'll emphatically state that there is no substitute for reading the lease. Unfortunately, a lease with the words net-net-net at the top, may contain clauses that make it more like a double net lease. The most common carve-outs vary by tenant. Fedexes and Walgreens for example often leave roof and structure to the landlord, but may also leave downspouts, parking lot striping, resurfacing, etc. to the landlord.

I think one of the messages here is to buy from a listing agent who you trust, but still make sure that if you and your client don't understand the lease, you encourage your client to hire an attorney to read the lease. I can recommend one, but any local attorney with lease review experience is a potential candidate.

Many clients (and brokers) are penny wise and pound foolish in this regard. A misunderstood lease can be a disaster down the road. My link below is to a very basic article on Net leased properties and some considerations(the last article on the page). Please be aware it's no substitute for partnering with an experienced honest Net leased specialist. Good luck!
0 votes Thank Flag Link Thu Oct 28, 2010
I'm sure glad Jed's not my agent. Geez, lol.
0 votes Thank Flag Link Mon Jul 12, 2010
Well put Herb, and glad to see you're an active player in the current market... hope to do a deal with you in the future.
0 votes Thank Flag Link Sun Jul 11, 2010
Come on Greg what's the story here?

This is hilarious. Gregory Garver lists himself as a Commercial Broker. If he in fact has a Brokers license and advertises himself as a "NNN Commercial Broker" he should know what a triple net lease is and the difference between a triple net, double net, net, or a gross lease.

For all the rest of the folks who might find this thread in the future the answer is every lease will vary. If I am working for the owner I want few to no expenses and a decent return. I am willing to trade some future expense for a higher return. If I represent the lesee I want the cheapest rent and the least exposure to unknown expenses. Does the tenant take responsibility for the roof lets say. Depends on how long he's going to be there and where is the breakdown of the monthly payment.

When buying an investment property one should look out for and be aware of everything. There are few disclosures and it's truely a buyer-beware transaction. Doing the due-diligence during the escrow period is key to knowing what you are buying. If you like to ride rough with agents that will skin you if possible go for it.

Every agent who has questions about terms should have a copy of Barron's Dictionary of Real Estate Terms and any agent that needs to ask a question like this should never represent a client in a transaction like this.
0 votes Thank Flag Link Sat Jul 10, 2010
Jed Lane; Fog…, Real Estate Pro in San Francisco, CA
MVP'08
Contact
OK, so what you are saying is that lease deal you are doing is a double net lease even though the tenant you are representing is not responsible for property taxes or maintenance? I'm a little confused. What's a gross lease then?
0 votes Thank Flag Link Sat Jul 10, 2010
Gregory,

Not sure what your question is.

NNN LEASE: A triple net (NNN) lease is one in which the tenant pays all or part of the taxes, insurance, and maintenance associated with use of the property. These fees are paid in addition to the tenant's regular monthly rent. There are also a variety of other formations, NN NET can be designed specifically where the any of the 2 are paid by the tenant. I have a client about to sign a lease where they pay the separately controlled utilities (water, PGE) and insurance only.

Are you referring to a 1031 Exchange based investment in which the investor moves their money into Tenant In-Common Securities? Sometimes called TICS (pronounced TICKS) but have NO CORROLATION to what people commonly think of in San Francisco as Tenant In-Common potential condo conversion type properties.

Realtors CAN NOT sell TICS. Under the most broad answer they are governed under the Securities Act of 1933 and a host of other regulations. These investments are restricted in their sales to the Securities market and licensed professionals, in addition they.are restricted to Accredited Investors (specfic guidelines determine suitability) and can not be discussed in this type of open forum.

I am dual licensed as a Realtor and a Securities Professional and am very familiar with this. If this is what you are referring to and have further questions please don't hesitate to give me a call.

Herb Alston
(415)341-8881
0 votes Thank Flag Link Sat Jul 10, 2010
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