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    Responsibilities of a Landlord in a Triple Net Property

    The Responsibilities of a Landlord in a Triple Net Property

    Triple net investment properties are attractive for various reasons. For one, they’re usually leased by investment-grade tenants, so they’re a low-risk investment with a predictable income.

    Tenants — who typically sign up to 10-year leases — provide stable and reliable income streams. These tenants tend to stay for a long time, so there’s a lower chance for turnover. But you have to make sure that you get a tenant with a viable business model and a manageable amount of debt. They should have a good track record of loan and credit payments and a stable operating profit line.

    Additionally, a triple net lease’s extended lease periods and minimal financial responsibilities can help you build equity. So why not dip your toes into this type of investment?

    Here’s what you should know about your responsibilities as a triple net property landlord.

    The Financial Responsibilities of a Triple Net Property Landlord

    One of the most convenient things about investing in a triple net lease is that, as the landlord, you don’t have many financial responsibilities, because tenants handle most of the property-related payments.

    Your tenant will take care of everything from interior maintenance to monthly utilities and building insurance to property taxes. The only factors you might have to consider are the structural components like the building foundation, roof, and structural walls. However, depending on how the lease is structured, even expenses like roof upgrades, exterior wall maintenance, and other structural repairs may fall on the tenant.

    Nevertheless, you have to be prepared to shoulder the following expenses:

    Property Mortgage

    This includes monthly mortgage payments, along with loan interests and other financing fees. But you can easily offset these expenses by using the tenant’s rent until you pay off the mortgage.

    Property Insurance

    Although tenants typically set up and pay for triple net property insurance, the landlord still needs to be listed on the policies. Some insurance types might also need to be covered by the landlord. It’s best to discuss and negotiate policies with your tenant before they set up their insurance.

    Structural Maintenance

    Though your tenant is in charge of the monthly utilities and day-to-day operating costs of the triple net property, you may be responsible for expenses like roof upgrades or exterior wall maintenance depending on how the lease is structured. Look into how you want your lease structured if you want these responsibilities to fall on the tenant instead of you.

    These above possible responsibilities aside, all other expenses are typically shouldered by tenants.

    Invest in the Right Property Type

    Triple net leases are a good investment for people who want to preserve their wealth but have no interest in being full-time landlords. It gives you a consistent cash flow without the complications of most commercial real estate investments.

    On the other hand, it might not be the best arrangement if you want to grow your commercial real estate portfolio aggressively or if you want to be an involved landlord.

    Brisky Net Lease has been filling the gap in commercial real estate investments since 2010. Our client-centered approach helps us guide you through premier commercial real estate listings and narrow down the most suitable property investment for you.

    Talk to one of our brokers about triple net property investment opportunities today: 612-413-4200.