Real Estate 101
Types of Lease Structures
The five main types of lease structures and what that means for you.
There are five major types of lease structures that vary primarily on what costs are the responsibility of the tenant. These costs may include property expenses like insurance, maintenance, and property taxes, on top of your rent.
With a triple net-lease ("NNN"), expenses for insurance, roof and common area maintenance, and property taxes are your responsibility, not your landlord’s. However, in this type of lease, you don’t pay these expenses upfront — your landlord does. Then, by calendar or fiscal year-end, you would fully reimburse your landlord.
With most double net-leases ("NN or NN (R&S)"), insurance and property tax expenses are incurred by you as a tenant. It’s up to your landlord to pay for common area maintenance such as the roof, structure, and parking lot.
Absolute net-leases ("Abs NNN") create a very passive income stream, as your landlord is not responsible for any expenses. All building expenses are directly paid for by you, as a tenant.
Single net-leases ("net") aren’t too common. They require the landlord to pay for property maintenance along with another expense such as insurance or property taxes. You would incur the cost of all other expenses.
Unlike net-leases, gross leases come with a flat fee to the tenant that includes all expenses, like insurance, maintenance, and property taxes. They can also exclude extra expenses that you would typically pay for on your own, such as internet.
Tenant pays expense
Landlord pays expense
Triple net (NNN)
Pays upfront & gets reimbursed
Double net (NN or NN (R&S))
Absolute net (Abs NNN)
Single net (net)
For more information and to see what type of lease structure suits you best, reach out to us at email@example.com
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