A Definitive Guide on Single Net Lease Properties


Single net leases, commonly called “N” leases or net leases, are slowly becoming common in the rental world. In such a lease, the landlord transfers some risks into the tenant, like taxes on top of the rent. Other responsibilities like maintenance and repairs, utilities, and insurance remain the landlord’s responsibilities.

It doesn’t matter; the landlord is responsible for repairs and maintenance, even during the lease period. The repair, however, must be within the property. In most cases, single net lease tenants may pay slightly lower rent than tenants in a standard lease. This is because the tenants take care of added responsibilities like taxes.

But even if they are paying slightly higher rents, the landlord is not compelled to update the expenses. For example, a tenant may make late payments or miss to pay completely to the municipality. That means the landlord is on the hook for fines. For that reason, most landlords tend to include added costs like taxes in the rent. This ensures that the taxes are paid in the right amounts and on time.

Single Net Lease Vs. Other Types of Lease

Most people are used to gross leases which is the opposite of net leases. In a gross lease, the landlord is responsible for all costs and anything to do with the property, and the tenant is only required to pay rent. Most non-commercial properties fall under gross leases, and the tenant is expected only to take care of personal utilities.

In double and triple net leases, the tenants pay off two and three major operating expenses, respectively. The major operational expenses include maintenance, insurance, and taxes.

Advantages of Single Net Lease

As aforementioned, single net leases are becoming increasingly popular. This is because they offer the most and unique advantage to the investors. Here we take a look at some of the benefits.

Low-Touch, Low-Risk, and High-Reward Investment

Commercial investors, especially those looking for high-reward and relatively low-risk with considerable amounts of maintenance and involvement, prefer a triple net lease. However, it has turned out that single net leases can be ideal for such investors because only a few requirements are involved.

The investors deal with a single property with one long-term tenant and a single set of stipulated agreements with the tenant. A multi-tenant lease, on the other hand, is more complex. The investor has to deal with multiple tenants who end up having unique terms.

Monthly Rent Payments Offset Financing Fees and Mortgage

Most individuals financing triple ne is p, not property believe it is the most excellent way to get involved in an investment. In such a case, you don’t need to have a total purchase amount in cash. However, for a triple net lease property, an investor needs advice from an experienced net advisor. With advisors, the investor has many financial options that range from complete to partial property funding.

While the financial options may help you expand your choices, they may be overwhelming at times. An investor can begin offsetting economic costs using monthly rent from a tenant with an existing tenant agreement.

Enjoy Reliable and Steady Income

A single tenant net lease property is reliable since you are guaranteed to get a steady income. In addition, since the tenant has to pay every month, you have the chance to ignore expenses linked to the building. Most of these expenses include insurance, upkeep, maintenance costs, and taxes that the owner would typically handle.

 Because the tenant is responsible for significant expenses, you are not likely to encounter extended costs like tax bills, maintenance fees, and repair costs. That guarantees you maximum profitability from the investment.

Low-Touch Management of Long-Term Renter

With a single net lease property, you are working with a single but long-term tenant interested in growing their brand. For the landlord, this type of investment is low touch with low risks as well. In addition, because the tenant is in charge of the operating costs, maintenance fee, and taxes as part of the business costs, you will not get involved in the upkeep of the building.

If you don’t want to carry the burdens of the landlord, this is an ideal solution for you. Unlike in the past, where landlords had to carry cumbersome duties, single net lease property lifts all those from your shoulders.

Expert Advice and Guidance

Deciding to purchase a single net lease property is a significant investment that requires multiple considerations. You have to consider the type of longevity that can be created and the type of business you are into. Before choosing and engaging in a single net lease, it is essential to consult with an experienced team of advisors. The responsibility of the advisors is to guide and support you in every step.

Not every team of advisors is aware of all considerations of a single net lease. Most of the advisors are used to multiple net leases.

Compare listings