Particularly in a residential lease. Is this ever a good option? If so, why?
2 thoughts on “When and why would a triple Net (NNN) lease be considered a good option for a tenant?”
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Particularly in a residential lease. Is this ever a good option? If so, why?
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I’m going to try to focus into this answer this way, but I might need some additional clarification otherwise.
As I understand the way that you are asking the question, the house that you are looking at is to be your primary residence, not an investment NNN Tic…
Generally, they are not favorable options for RESIDENTIAL tenants.
They would be considered a good option for the tenant if:
1. NNN rent + expected maintenance + taxes + insurance <= market rent
2. You can lock in a longterm NNN rent at below market rents
3. You are confident in the property that you are occupying/no significant deferred maintenance that you would be responsible for…
I really haven’t heard of many NNN leases for people’s primary residences, but it would make sence. They are much more common in the investment property/business property arena…
In the end, you’ll have to do the math to determine whether the lease payments plus the additional expenses add up to a good value…
A NNN lease for a house allows the Landlord to have a specific known amount coming in every month. Let’s look at the different components of the NNN. Insurance. No difference to you or landlord. If it is a gross lease, insurance cost would just be included in your total amount. Taxes, the same as insurance. If you are signing a residential lease for more than one year, then the incentive to keep the taxes low falls a little more to the tenant than Landlord, but not much. When you move out, the Landlord pays the taxes, and he wants the amount as low as possible. Thirdly, and most broad is, maintenance. Mowing the lawn, your expense. But, here is what you need to know. Who pays for the repairs to the property. Ask the Landlord specifically about this. If the Tenant is responsible, I would consider passing on the deal if it is an older home. AC units have a way of costing a lot of money. Sometimes, there can be a compromise on large items, say anything over $500.00 is the Landlord’s expense. If you have any questions, feel free to email.