Other Types of Net Lease

There are two other kinds of net leases that are important to know when investing in real estate. A double net (NN) lease follows the same guidelines as a NNN lease, except the landlord, not the tenant, is responsible for the structural components, such as the bearing walls, roof, and foundation. Other responsibilities the landlord could encounter include parking lot maintenance and parking lot lighting. These are generally less desirable to investors, however the return on investment is usually higher. A good example of a company that is traded well with a NN lease is O’Reilly Auto Parts.

Another type of lease is the modified net (or modified gross) lease. A modified net lease entails the tenant being responsible for their own insurance, repairs and maintenance, and utilities. Anything else, including property taxes are covered by the landlord. This type of lease has somewhat fallen out of favor, but much better returns can be seen with this type of lease.

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