Triple Net Lease: Gain a fixed-income

Suppose you get a fixed stream of income, stability, and an absolute guarantee on your investment. Sounds good, doesn’t it? Yes, you can get all of these benefits with the triple net lease.

Usually, for retirees, purchasing bonds hold quite a lot of attraction. However, in this day and age, when inflation is eroding away an individual’s purchasing power, bonds can turn out to be the worst enemy. Other than facing a decrease in their real value due to increasing inflation, they are also prone to risk from fluctuating interest rates.

Which most often would if the inflation is running rampant. Also, there is another risk associated with bonds. The fear is that the bond issuer might not pay scheduled interest or principal payments on time or might not be able to pay at all.

Inflation also erodes away a bond’s return yield. So, for example, if the bond pays a yield of 5%, and the inflation is 4%, the return value will be only 1%. And don’t forget about the taxes. However, an alternative remedy to investment risks is a net lease, which can eradicate all problems an investor faces while holding bonds.

What is a net lease?

A net lease is a real estate contract signed between an investor and a tenant, where the tenant has to pay all or partial payments for taxes, insurance premiums, and maintenance costs along with any utilities and rent.

What is a triple net lease?

A triple net lease is a kind of lease associated with real estate investment, where the investor or landlord leases out a property to a tenant. The condition of the lease is that the lessee will pay the taxes, insurance premium, maintenance, or repair costs along with the rent to the landlord.

 Usually, the lease term is set for five to ten years, and concession on rent is provided to the tenant. Moreover, the landlord is not responsible for paying for any damage that may happen to the building during the lease term. Also, the tenant cannot default on the maintenance cost, however much high it is.

Benefits of triple net lease

Some of the benefits of triple net lease properties are as follows:

Little or no responsibility

All the burden of paying for taxes, maintenance costs, utilities, and insurance falls upon the tenant, freeing the landlord from any responsibility of maintaining the property themselves. They will still own it but won’t have to keep an eye on it.

Protection from increased expenses

The landlords won’t be responsible for paying for the difference if there are increased expenses such as taxes or maintenance costs over the years. They will be protected from paying any extra expenses.

Ease of selling to another buyer

In case a landlord wishes to sell their property or pass it to their children, they can easily transfer it to the next owner. Some investors also buy properties to make a few changes and sell them to another buyer. This makes the triple lease properties quite flexible and easy to sell in a fair amount of time.