Compare Investments By Lease Type

Compare Investments By Lease Type

In commercial real estate leases, it is very important to understand which expenses are covered in the lease and which are excluded. Leases can vary widely from one property to the next and potential investors need to study the lease before making the decision to invest in a particular property or to walk away

Lease Type Multi-Family Retail Office Industrial Hospitality Land
Absolute Net (0 landlord responsibility except for Land cost)
(Single Tenant Only)

(Single Tenant Only)

(Single Tenant Only)
Full Service
NNN* (Triple Net)
Owner User

* First N -Property taxes, Second N – Property Insurance, Third N – Roof Structure and Common Area Maintenance


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Absolute Net vs. Double vs. Triple Net Leases

These types of leases are often used in commercial real estate. In addition to triple net leases, the other types of net leases are absolute net leases and double net leases.

Absolute vs. Triple Net Leases: An Overview

An absolute net lease is described as “Zero Landlord Responsibility Property”. This type of lease applies only to single tenant properties and the tenant is normally a high credit national tenant who has signed a long-term lease.

Not only do they pay you the rent but they also insure the property for you and go and pay the property taxes for you. If the parking lot needs to be replaced or the roof of your investment property needs to be replaced, they will take care of it too, at their own expense.

NNN lease is where the landlord pays the taxes, insurance and all other expenses and gets reimbursed by the tenant. NNN leases normally do not include roof, structure and parking lot.

Rents are generally lower with net leases than traditional leases—the more expenses a tenant has to bear, the lower base rent a landlord charges. But triple net leases are usually bondable leases, which means a tenant cannot back out because the costs—especially maintenance costs—may be higher.

Double net leases

also called net-net leases = "NN" leases, are especially popular in commercial real estate where the tenant pays property taxes and insurance premiums and maintains the inside of the property. Roof, structure and parking lots are landlord responsibility.

In larger commercial developments with more than one space available to rent, such as shopping malls and expansive office complexes, tenants may have different square footage than their neighbors will have NNN leases. Landlords typically assign taxes and insurance costs to tenants proportionally based on the amount of space leased.

The base rent— payable for the space itself—is generally lower because of the additional expenses the tenant must bear. All maintenance costs, on the other hand, remain the responsibility of the landlord, who pays for them directly and are reimbursable.