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On paper , a NNN lease might seem like a low­risk long­term investment . But like with any investment , paying attention to the details can mean the difference between profit and loss . This is especially true now more than ever in our ever changing , fast­paced world .

In this article , we ’ ll discuss NNN leases and what makes it a good investment . We ’ ll also offer a case study ( specifically CVS ) in order to demonstrate how investing in a NNN lease can go wrong . Risk is built into any investment , but there are ways you can minimize these factors to set yourself up for greater success .

What is a NNN Lease ?

The triple N acronym describing this particular lease stands for the following :

Image by mohamed Hassan from Pixabay

Picking The Right NNN Lease & The Downfall of CVS

By Clinton Lu , TFS Properties

● Net of property taxes

● Net of maintenance

● Net of insurance

These types of leases describe a commercial property that ’ s often leased for years at a time . Most of the time , tenants are big­box stores that plan on taking up residence for a long period . After all , it ’ s hard to do business and keep your loyal customers if you keep relocating .

Why is a NNN Lease a Good Investment ?

In terms of risk , NNN leases score lower than most investments . At the same time , that doesn ’ t mean they ’ re without risk completely . As long as you have the right tenant and right property , the risks are low enough to make a NNN lease an excellent source of passive income .

Another — and potentially the most attractive — reason NNN leases are lowrisk lies in the relationship between landlord and tenant . In a typical landlordtenant agreement , the tenant is responsible for upkeep and maintenance , along with taxes , insurance , and , of course , rent . This potentially makes NNN leases a great investment if everything goes well , but that is not always the case .

What Makes for a Good NNN Lease

recognizable name . High­quality credit tenants do the best .

Though the right tenant may look different in each circumstance , the right property certainly has similar qualities across the board . For instance , buildings that are newer may be more desirable , since the upkeep costs should theoretically be less . At the same time , new doesn ’ t always translate to quality , so be cautious .

The bottom line is that NNN leases are long­term investments . Most tenants will sign a 10 to 20­year lease . This makes NNN leases a powerful investment , even if inflation occurs . In most leases there will even be a provision built into the terms to help combat inflation .

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