Landlording & Rental Properties

How to Find a Tenant for a Triple Net Lease

4 Articles Written
modern complex of office buildings in the evening

According to The Motley Fool, "A triple net lease (or ‘NNN' lease) is a form of real estate lease agreement where the tenant or lessee is responsible for the ongoing expenses of the property."

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Unlike the single lease, on which the tenant pays one additional expense in addition to rent, and double lease, on which the tenant pays property taxes and insurance premiums in addition to rent, the triple net lease requires the tenant to pay rent and utilities, plus three additional expenses.

These expenses are:

  1. Real estate taxes
  2. Building insurance
  3. Maintenance

Advantages of Triple Net Leases

Triple net leases can be very challenging, but unlike the other types of leases, this form offers a lower rent rate because the tenant is already responsible for paying the aforementioned three expenses. This lower-than-market rent is a big advantage in finding a tenant for your property.

Related: Commercial Real Estate 101: Everything You Need to Know About Triple Net Leases

The tenant also has more control on the property they’re renting. For example, if something is broken in the unit, the tenant can directly hire someone to fix it rather than waiting for the landlord to find someone to fix it. This is very attractive, as it signals feelings of ownership, and is also good for people who have short patience.

strip mall with clothing storefront in view

Where to Find Triple Net Lease Tenants

Most national tenants have a real estate division. If you go to their corporate site and search for "real estate division," you will find the correct contact person. If you wish, you could even go to a commercial broker like CBRE, JLL, Colliers, and more to find the landlord representative.

The broker only gets paid if they find a tenant. The fee can be anywhere from 3 to 6 percent of the lease value.

Related: 2 Highly Overlooked (& Profitable) Commercial Real Estate Niches

Let’s say your broker finds you a tenant who signs a 10-year lease, paying $50K per year. That is $500K. So at 3 percent, you would need to pay the broker $15K.

I would recommend paying the broker a percentage at lease signing and a percentage when the tenant moves in.

And of course, you could always try to rent the space out yourself. But I would say after 30 to 60 days, if there’s been no movement, sit down with a broker.

Time is money!

What other methods have you used or heard about with regard to finding tenants for triple net leases?

Comment below.

Roni Elias is TownCenter Partners, LLC lead asset manager. Roni has worked in litigation cases reaching over $9.5 billion in recovery. At his previous firm, he managed a portfolio of over $520 mill...
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    Christopher Smith Investor from brentwood, california
    Replied 8 months ago
    I assume if you are going to trust someone to pay Insurance, Taxes and Repairs for a property you own you have vetted them thoroughly in this regard?
    Roni Elias Investor from McLean, VA
    Replied 8 months ago
    The preference is a publicly traded tenant. So for example McDonald's, CVS, and so forth.
    Jesse Hernandez Specialist from Monterey
    Replied 8 months ago
    True, Roni Franchise’s like Burger King, etc. have a corporate guarantee tennant will make good on lease terms.
    Roni Elias Investor from McLean, VA
    Replied 8 months ago
    Yes you want corporate, very strong credit worthy tenants.
    Olga Vision
    Replied 5 months ago
    Thank you for this article, Mr. Elias. A lot of valuable info. We have a small lot we're trying to find a triple net tenant for, & are not sure where to start, since this is our first foray into commercial, land, & triple nets. So, a huge learning curve for us.
    Roni Elias Investor from McLean, VA
    Replied 5 months ago
    Hello please call me Roni. I would reach out to your local CBRE, Colliers, JLL brokers and talk to them that you want to hire to lease the property out. You could even do a Land Lease. I would also see who is popular in your community you might see a lot of their signs.