Exchange Documentation Review

Triple Net Insight

The advantages of triple net lease structures

Triple net lease investments offer a unique blend of stability, passive income, and long-term growth that few other asset classes can match. Whether you're looking to diversify your portfolio, secure reliable cash flow, or leverage a 1031 exchange for tax advantages, these properties provide a low-risk path to building wealth.

There are two primary types of triple net leases: absolute NNN and regular NNN. An absolute NNN lease is a long-term, corporate-guaranteed lease (10 to 20+ years) between you as the landlord and a creditworthy tenant who pays all expenses associated with the property—real estate taxes, insurance, common area maintenance, and capital expenditures. In an absolute triple net lease, the tenant assumes all financial risk while you own the property with zero responsibilities; simply collect rent and live your life.

A regular NNN lease is also a long-term lease where tenants pay 100% of the taxes, insurance, and common area maintenance but may not include ALL expenses. These corporate-guaranteed leases may have clauses that require the landlord to cover expenses such as parking lot, roof, and structure, in which case the landlord bears some responsibility, though that responsibility is minimal. Even though regular triple net lease properties may require some maintenance costs, they are still a stable, income-producing investment.

• • Triple net lease tenants are significantly less likely to default, reducing owner risk and providing consistent monthly income.
• • The value of NNN investments is not susceptible to wide swings and daily fluctuations, delivering worry-free, stable income that escalates over the lease term.
• • These properties typically feature investment-grade tenants with S&P and Moody ratings—essential retailers that prove resilient even during economic downturns.
• • With tax opportunities, rent escalations, possible leverage, and financing terms, your internal rate of return can be as much as 7–10% or more, comparable to gross lease investments and stock market returns without the headaches.