An absolute triple-net, or NNN, leased property means no management headaches for the landlord.
This lease structure requires the tenant to assume all costs and management responsibilities of the property. Thus, the tenant is responsible for all real estate taxes, insurance, other operating expenses and even capital expenditures such as repairs of the roof, structure, parking lot, etc. An absolute NNN property is an investment that is truly passive in nature, and may allow you as landlord to simply receive monthly rental checks.
Most absolute NNN properties with long-term leases (i.e.,10 to 20 years or more) are single-tenant properties. Typical tenants include fast-food restaurants like Wendy's and Chick-fil-A, fast-casual restaurants like Starbucks and Panera Bread, drugstores like Walgreens and CVS, cell phone service providers like Verizon, banks like Bank of America, automotive parts stores like AutoZone, etc. With these types of properties, the strength of the lease, tenant and location will largely determine the quality and success of your investment.
To learn more about NNN properties, please refer to our Straight Talk guide, "Transitioning from Ag Land to Commercial NNN Leases."
NNN Ground Lease
A ground leased property is a type of NNN property in which you own the land only, and lease the land to a tenant. The tenant constructs, at their own expense, a building on the leased ground. Throughout the term of the lease – generally 15-25 years or more, plus renewal options – the tenant pays you regular rent payments to lease your land. Because the tenant owns the building and improvements upon your land, the tenant is responsible for all costs and management responsibilities related to them.
At the end of the lease term, or earlier if the tenant terminates the lease, the building and improvements become yours – at no cost. Because the lease is effectively secured by the value of the building, NNN ground leases are considered some of the most stable, conservative commercial investments available.