NNN (Triple Net) Lease Explained

The basic idea

In a net lease the tenant pays some or all of the property's running costs on top of the rent. The word net means the landlord receives the rent net of those costs.

Single, double and triple net

The number of nets shows how many of the three main costs the tenant covers.

• Single net (N): the tenant pays the rent plus property tax.
• Double net (NN): the tenant pays the rent plus property tax and building insurance.
• Triple net (NNN): the tenant pays the rent plus property tax, insurance and maintenance of the property.
• Leases are negotiated, so always read what is actually listed, because the labels are used loosely.

Why buyers like them

Because the tenant carries many of the costs, the owner's income is more predictable and the work of owning is lighter. Properties let to well-known tenants on long leases are often bought for steady income.

What to check

The strength of the tenant and how many years remain on the lease. What the lease says about rent increases and who handles major repairs such as the roof and structure. Whether the tenant can leave early. The property tax and insurance bills, because a sale can raise them.

For tenants

A lower base rent can come with costs that move up and down. Ask for a history of the taxes, insurance and maintenance costs and read how they are shared and capped.