Types of net leases
There are three types of net leases, which are called single, double, and triple net leases.
Single net leases. A single net lease, sometimes just called an “N” or an “N lease,” is a lease where the tenant pays the rent plus one other item, typically property taxes. Although other types of non-net leases have this baked into the price, in a single net lease, the tenant is paying the actual tax amount, either directly to the municipality or to the landlord, separate from the rent.
Double net leases. Double net leases, also known as “NN” or “NN leases,” ask the tenant to pay the rent plus insurance and taxes, generally. They may have a smaller base rent than an N lease, but the additional expenses can add up quickly. The landlord will still pay for maintenance and upkeep, however.
Triple net leases. If you’re a REIT investor, the triple net lease is really what you’re looking for. In an NNN, the tenant pays the rent, plus essentially all costs associated with the structure, from taxes and insurance to upkeep, repairs, and any modifications that may be needed. Again, the base rent may seem very low initially, but these other expenses can make them much more expensive and unpredictable than a single net lease. For the investor or landlord, however, triple net leases reduce overhead substantially.