Triple Net Rents

Written by Linda Alexander
Bookmark and Share

The current market for triple net leased properties is hot, particularly in 1031 exchanges. Many investors and business owners want to put their money in real estate without having to manage the property on a daily basis. Triple net rents provide passive income and are a benefit to those who need a steady income.

When you purchase triple net property, there are some drawbacks. No, you don't have to contend with monthly renters and high turnover or operating expenses. However, the potential for return is not as great as with other types of leases. Triple net leases are generally in place long term (10-15 years or more) and if the market improves in that time, you will be missing out.

Passive Income

Triple net properties also offer no investment diversification. Following the rule of not putting all of your eggs in one basket, if you invest in a single triple net property, you are putting yourself at risk. True, most triple net tenants are financially stable and credit-worthy, but that doesn't mean they will always be that way. Companies go bankrupt every day.

Still, triple net leases are safer than many other types of investments, not to mention easier to manage. You are protected against rising operating costs and you will have a long-term passive income. Be aware of the pros and cons of any investment before putting your money into it.

Bookmark and Share