What is a NNN (triple-net) Lease?
A NNN or triple-net lease removes the burden of property management from an investor’s shoulders by asking the tenant to pay all operating expenses associated with the property along with the base rent. In other words, you being the landlord, won’t have to keep track of property bills such as property taxes, insurance fees, and maintenance costs or pay them by yourself. In a double-net or NN arrangement, tenants are only required to cover any two operating expenses along with the base rent.
NNN 1031 Investment Explained Through A Hypothetical Example
George, a 60-year-old investor, decided to do a tax-deferred exchange (1031 Exchange). Out of his investment properties, George chose to relinquish his rental property, which was on the verge of depreciation. Upon selling his relinquished property, he reinvested the sale proceeds in a NNN property with the help of qualifiedintermediary.com. By doing so, George helped himself in securing an income-producing property against a depreciated asset. Also, he freed himself from landlord responsibilities as his NNN lease agreement didn’t require him to pay operating expenses. In the process, he also saved thousands of dollars he would have paid in capital gains tax.
NNN 1031 Investment Benefits -
- Freedom from property management.
- No Operating expense.
- Frequent hike in the property rent.
- Regular flow of cash.
- Defer tax.