Triple Net Lease (nnn)
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The Triple-Net Lease, otherwise referred to in the business as "nnn", is well-known among professional investors, but almost never discussed in real estate programs.
Let us assume there is a 12 unit apartment building with an owner ready to retire (or just tired of being a landlord).
He is earning a net income of $4000/month after all operating costs. He wants out, but needs the income. What to do?
You come along and offer to take over full management and responsibility - a triple-net lease.
You agree to pay him $3500/month, with you getting the $500/month and he does not need to do anything - you take care of it all,
right down to paying off the mortgage, taxes, insurance - everything. You are king of the building.
Now you go to work, spiffing things up, one unit at a time, and increasing the rent of each unit by, say,
$25/month. Now, instead of getting the $500/month, your income is now up to $800/month.
Now you also begin cutting costs, by managing the property more efficiently. If the previous operating costs were $800/month, and you can cut that to
$500/month, you pocket yet another $300/month - a total of $1100/month. Not much, but this is, after all, a small building. Imagine if you had 10 times as many (or ten such buildings). Your income would be $11,000/month!
Now let us assume your 'nnn' includes an option to buy in 5 years. With some of your lease payment going toward the
purchase price, and adding appreciation, you would end up buying the building at a sizable discount. And now ALL of the income is yours!
As usual, it helps a lot to have the right contracts, a good mentor, and all the finer details. If you purchase a program,
get one that provides what you need, at a reasonable cost, such as "The Simple
Man's Guide to Real Estate".
Simple Man's Guide® is a registered trademark of IntelliBiz.
Triple Net Lease, nnn page © 2008