We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What are the Pros and Cons of a Triple Net Lease?

John Lister
By
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

A triple net lease is one in which the tenant is responsible for virtually all costs associated with a property, including taxes, insurance and maintenance costs. It is far more common in the commercial property sector than in residential rentals. The main benefits and drawbacks of a triple net lease differ for the landlord and tenant, but they include a lower rent payment, higher costs for the tenant, and the risk that the tenant will not maintain the building as required.

The triple net lease is one of four main types of lease. A gross lease is one where the tenant only pays rent and no other costs; this can be modified, for example in the common system by which the tenant is responsible for utility bills. A single net lease means the tenant also pays the relevant property taxes. A double net lease means the tenant pays the property taxes plus buildings insurance. A triple net lease, also known as Net-Net-Net or NNN, covers all of this, plus the tenant is responsible for maintenance costs.

For the tenant, the main benefit of a triple net lease is that the rent payment itself is usually relatively low. This can be particularly beneficial if the tenant is able to cover the other costs cheaply. The biggest drawbacks include both the existence of the added cost responsibilities, and the fact that these will apply even if the company's business performance suffers. In particular, tax laws may restrict how much of these cost responsibilities are tax deductible.

For the landlord, the key advantage is that that on an ongoing basis, he has few if any running costs. This means that the rent, albeit it lower than with other types of lease, is a relatively secure source of income. The main drawback, besides the lower rent, is that the landlord is taking a risk in making the tenant responsible for maintenance; if the tenant does a bad job, the landlord may have to either face additional costs, or go through the hassle and expense of enforcing the lease.

There is one step beyond a triple net lease. This is a bondable lease, sometimes called an absolute triple net lease. This means that the tenant is completely responsible for all costs under any circumstances. The most notable consequence of this is that in the event of the building being destroyed, for example in a fire, the tenant must not only continue to pay rent, but must completely rebuild and restore the property, regardless of whether any insurance scheme pays out.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
John Lister
By John Lister
John Lister, an experienced freelance writer, excels in crafting compelling copy, web content, articles, and more. With a relevant degree, John brings a keen eye for detail, a strong understanding of content strategy, and an ability to adapt to different writing styles and formats to ensure that his work meets the highest standards.
Discussion Comments
By Logicfest — On Jan 15, 2015

@Markerrag -- I think the article does a good job of pointing out why people would want to take out a triple net lease, but I will provide another. Simply put, this kind of lease means you can get a low payment without having to be tied to a piece of property.

Think about it. You might essentially be paying around as much as a mortgage payment, but you can pick up and leave when the lease expires instead of being stuck owning something.

That is a real blessing in the commercial context as areas go in and out of fashion in a hurry. If you own property in an area that falls out of favor, have fun watching your property values drop. If you lease a property in one of those areas, just cut and run when the lease expires and leave it up to the owner to deal with that dog of a property.

By Markerrag — On Jan 14, 2015

These things are downright horrible. It is just renting without any of the benefits of renting. Why on earth would someone rent a property if taxes, maintenance and insurance are covered? Why not just get a mortgage and have done with it. You would at least be building up equity in a property instead of essentially making the mortgage payment for a landlord and having to shell out cash for all sorts of things that renters should not have to worry about.

John Lister
John Lister
John Lister, an experienced freelance writer, excels in crafting compelling copy, web content, articles, and more. With...
Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.