What is a net leased investment?
There are several types of net leases but for this article we will consider one called a triple net lease, or absolute net lease. In a triple net lease, the tenant agrees to be responsible for all expenses, eliminating the need to hire a property manager and to continuously shell out money for repairs and maintenance. The tenant usually pays the rent, plus taxes, maintenance and insurance. It is common to see this type of lease used by retail chain stores and restaurants during an expansion phase. The retailer can quickly open new stores without having to purchase real estate and can put all of their capital to work immediately without having to tie any up in real estate equity. This capital retention comes with a price – which is paid to the owner of the real estate in the form of generous lease terms. From an investor’s standpoint, purchasing a net leased investment property affords many benefits. The primary advantage of net leased investment is the ability to retain any appreciatio
