Property Tax Depreciation

Are Triple Net Lease Property Investments Risk Free?

Many property investors believe that triple net leased property investments make for good, safe, passive investments.

This can be the case, but there can also be serious financial consequences should they not be managed properly.

Triple net leases differ from traditional leases in that the tenant is generally responsible for all of the operating expenses including repairs, maintenance and life cycle capital expenditure – a new roof, air conditioning system, lifts, and the like.

However, there are risks to be aware of with such property. Triple net lease investments are often single tenanted properties, perhaps with a special purpose or use.

The commercial stability of the tenant is of course fundamental in any investment, but in a triple net lease are they also going to:

  • Take a proactive and planned approach to managing the asset?
  • Keep on top of property maintenance and life cycle repairs and replacements?
  • Fully understand what their obligations are?
  • Know how to live up to and manage their end of the bargain? Continue reading