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What Is a Triple Net Lease in Commercial Real Estate?

Are you considering signing a triple net lease for a commercial building in the Houston area? If so, you need to make sure you have all the information regarding these commercial leases before signing on the dotted line. Bryan & Bryan Inspections conducts commercial inspections for triple net leases often. Learn more about what a triple net lease is and if it’s the right decision for you.

Types of Commercial Leases

A gross lease and net lease are two of the most common types of commercial real estate leases. A gross lease includes a fixed monthly payment to the owner of the commercial building you are leasing plus the cost of utilities. There are no extra fees and no surprise expenses. A net lease includes a fixed monthly rental payment and utilities plus one or more extra expenses such as property taxes, building insurance, and building maintenance. 

Features of Triple Net Leases

There are three types of net leases. A single net lease includes the monthly rental payment and utilities plus property tax payments. A double net lease includes rent and utilities and additional payments to cover taxes and commercial insurance. Along with the monthly rent and utility payment, a triple net lease includes property taxes, commercial insurance, and building maintenance. Triple net leases are often used when leasing a freestanding building with a single tenant, but they can be used for any type of commercial property. Typical terms for a triple net lease are 10 years or longer with regular rent increases included.

Benefits & Drawbacks

If you’re not planning on owning commercial property, a triple net lease can be an advantage. Commercial property ownership can be more expensive than a triple net lease. Although you’re still paying taxes, insurance, and maintenance, the monthly rent is often cheaper than a monthly mortgage payment. The major drawback of a triple net lease is the added expenses of taxes, insurance, and maintenance. Building maintenance can be very unpredictable. One month you can have no major issues and the next month the building may need a completely new HVAC system.

Serving Houston & Beyond

Contact us at (866) 484-8318 to request a quote for a commercial property inspection. We gladly serve the Houston area with all of our inspection services including residential inspections, mold inspections, pest control services, and stucco services.

Source: “What Is a Triple Net Lease?” Web article. Millionaire Acres. The Motley Fool, LLC, 22 Oct. 2021. Web. 31 Dec. 2021.

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