A net lease gives an opportunity to the property owners who wish to obtain a regular stream of income on their investment and to the tenants who occupy a space to run their business. The different variations of net lease deals have different financial liabilities for the owners and the tenants.
The net leaves are of different types such as the NN or NNN lease. If you are looking for a net lease deal with Sands Investment Group, the double net lease has the best services. This term is very popular in the real estate business.
It is a rental agreement where the tenant agrees to bear the cost of two out of three expenses of the property such as taxes, utilities, and insurance premiums. The landlord or the property owner is responsible for building maintenance expenses.
This agreement between the owner and the tenant involves repairs and maintenance with operational expenses. As the net lease is associated with additional cost, most of the landlord/owners accept reduced rent payments from the tenants.
In the case of commercial properties (shopping malls) where you deal with multiple tenants, NN lease is very popular, taxes and insurance fees are individually assigned to the tenants on the basis of the area occupied.
Advantages of NN Lease
As the tenant is responsible for paying taxes and insurance premiums the owner has the benefit of passing through a good phase of financial liability.
The landlord/owner is free from the tension of insurance policies and yearly taxes on the property because both of these are covered by the tenant on the basis of the agreement.
Disadvantages of NN Lease
The biggest drawback of this net lease is that the owner/landlord has a very low-profit margin on his investment.
Being a landlord he assumes that the maintenance and structural expenses are his responsibility or we can also say that the owner may come across some unexpected expenses relating to the maintenance of his property.
Therefore, before signing an agreement the owner should go through the terms and conditions of the investment deal in order to learn about his financial responsibilities.
A thorough inspection of the building/property can help him in determining whether it needs a repair or upkeep.
This is how he can minimize the work leading to financial profit. The age and condition of any property play a vital role in reducing the risk of landlord/owners.
Therefore, if you are interested in investing in an NN lease, hire the best investment group to get the best deal or business.
Make sure that the agreement is properly framed and understood by both parties. The terms and conditions are laid in such a way that they display a clear picture of financial responsibilities to the owner as well as the tenant.
As a landlord the net lease should be able to control the financial risk and that the expenses are paid on time. The agreement should provide a clear view of additional expenses so that you may not face any surprises in the later stage.