How to Gain From a Triple Net Lease

How to Gain From a Triple Net Lease

September 21st, 2010

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How to Gain From a Triple Net LeaseBy an eHow Contributor I want to do this! What's This? A triple net lease can be an extremely good deal for a landlord who's tired of managing properties. The owner gives all rights to the renter, except ownership, but the renter also gets the responsibilities to do repairs and pay bills. There are some basic advantages for both the landlord and the leaser and you can write up contracts for individual situations.Difficulty: ModerateInstructionsTriple Net Leasing for the Landlord

1.    Count the cash flow. The money from a triple net lease is only reduced by the taxes paid on it. Unlike the sale of property, the taxable amount is a cash stream and taxable annually.

2.    Relax in the knowledge that all upkeep is done by the tenant. All property tax, insurance and maintenance can be paid as an expense to the tenant. This reduces your paperwork and out of pocket expense.

3.    Scrutinize your contract for clauses that require you to pay above a certain ceiling in repair or taxes. Make certain that if the clause is in the contract, you have money set aside.

4.    Allow for a reserve fund. The tenant pays into it monthly and large expenditures can be made from it in emergencies. This protects the landlord from the property falling into disrepair.

5.    Take depreciation to offset the income made. This frequently allows for a great deal of tax free money.

6.    Consider the appreciation of the property. The triple net lease will give you "action free" income while the property is appreciating.Triple Net Leasing for the Tenant

7.    Calculate out of pocket expenses prior to signing on the dotted line. If there is considerable work to be done to the property, you will be responsible.

8.    Check the lease to make certain that you can transfer some costs if they skyrocket during the time frame.

9.    Build your credit history while you pay on the lease. This type of arrangement is good for those that have non existent or poor credit history.

10. Take the deductions from the property to offset the income that is made. All the bills that are paid by you are tax deductible. The landlord, however, gets the depreciation.

11. Rent the property out as though you owned it. You have all rights to the property and can make money from it by charging a higher rent than the total of the monthly payment plus expenses.

12. Increase your rents as inflation increases other costs or property appreciates. This can give you a wider spread between the cost of the lease and the income.

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