Asset Class Guides

What Is An NNN Lease

An NNN lease, short for triple net lease, is one of several common commercial lease structures, and understanding how it differs from a gross lease helps an investor evaluating property in or near Dallas, TX compare opportunities accurately. In a gross lease, the landlord generally pays most or all of the operating expenses, including property taxes, insurance, and maintenance, out of the base rent collected, so the tenant generally pays a single predictable rent figure. A modified gross lease generally splits some expenses between landlord and tenant, with the specific split negotiated per lease. A triple net lease shifts responsibility for all three major expense categories, taxes, insurance, and maintenance, to the tenant, who generally pays these directly or reimburses the landlord in addition to base rent, which is why the structure is called triple net, referencing the three net expense categories. From a landlord's perspective, a triple net lease generally produces a more predictable net income stream since expense volatility is largely absorbed by the tenant, though the landlord generally still bears responsibility for structural elements such as the roof and foundation unless the lease specifically shifts those as well, a variation sometimes called an absolute or bondable net lease. From a tenant's perspective, a triple net lease generally offers more control over how the space is maintained but also more exposure to expense increases such as rising property taxes. This page is general education, not legal or investment advice, and specific lease terms should always be reviewed by a real estate attorney.