For serious real estate investors, triple-net leases can be a real win. But staying on the winning side of the deal requires a commitment to detail and due diligence, and, most importantly, an expert negotiator on your side.
Should I invest in triple-net lease properties? | Real Estate Weekly
By Marc Wieder, Partner, Anchin, Block & Anchin LLP Properties with triple-net leases can be quite attractive to real estate investors, but they aren’t as straightforward as they might seem. Due diligence is critical, as changes often can’t be made once the lease has been signed.
The Basics about Triple-Net Leases
Office, industrial, and retail properties can all be good candidates for a triple-net lease. Marc Wieder, a partner in Anchin, Block & Anchin LLP, explains the facts about triple-net leases:
Under a triple-net lease, the tenant assumes responsibility of the property’s ongoing operating costs (taxes, insurance, maintenance) in exchange for a long-term lease. The tenant also pays the landlord monthly rent. The lease puts some limit on capital expenditures, usually triggered in the lease term’s final months.
Benefits
Investors appreciate triple-net leases, because the leases relieve them of the kind of responsibilities usually associated with property management, yet still offer some of the payoff that comes with real estate investment. I recommend them because they offer some wonderful advantages, including in transactions involving 1031 exchange multi-family to triple net and 1031 exchange commercial to triple net. Here’s what Weider says:
The leases can also provide long-term, steady streams of income similar to an annuity. They typically have a low tenant turnover rate, which helps reduce marketing and leasing costs …. Properties with triple-net leases are also good for property owners who want to sell existing properties and reinvest in a Section 1031 like-kind exchange to defer capital gains tax.
Negotiations Matter—Get Expert Help
Consult an expert. It’s important to understand the ins and outs, particularly if you’re looking to use a triple-net lease property in a 1031 exchange.
Triple-net lease properties can make excellent investments, but negotiation of the lease terms is a critical factor in meeting your objectives. The professionals at Pacwest Commercial Real Estate are your local commercial real estate experts, and they’re only a call away. You can reach them at 541-912-6583 for the help you need!
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