Triple net (NNN) leases pass operating expenses through to tenants, which gives landlords predictable income. You can't value one accurately without reading the lease closely.
NNN Lease Components
- Tenant responsible for taxes, insurance, maintenance
- Landlord typically responsible for roof and structure
- Rent escalations (fixed, CPI, or percentage)
- Renewal options and termination rights
Valuation Factors
NNN investments are valued based on tenant credit quality, lease term, location, and rent basis relative to market. Credit tenants with long terms command lowest cap rates.