Real estate can be a great investment for your future. While many people consider buying an extra house to rent for income, they do not consider buying a commercial property and leasing that for income. There are different types of commercial rental units, with one being a good option for you if you do not want to have to worry about the property much. Single-tenant net lease investment properties just may be a great way for you to build up a good retirement fund. Here is some information to help you understand this type of owner/tenant contract.
What is a Single-Tenant Net Lease (STNL) Property?
This type of property is a free-standing building used for a business. It could be a medical office, retail store, restaurant, or office space. The important thing is that there will be only one tenant for the property. This means that once you have the tenant in place, you won't have to worry about empty units that are not providing income. The lease for these buildings is generally for extended lengths. It is not uncommon to have a lease of 10 to 25 years.
Types of STNL
In addition, these contracts include giving the tenant responsibility for many things the owner would normally handle. The amount of responsibility passed on depends on the type of lease. In a single net lease, the tenant pays all property taxes. A double net lease has the tenant paying the taxes and all insurance, including building liability. Triple net leases add the common area maintenance fees and upkeep of the property to the tenant. Finally, an absolute net lease means the tenant is responsible for everything an owner would normally take care of, including structural issues.
All of this means that you, the owner, buy a commercial property and lease it to a business as a single tenant triple net lease property or an absolute net lease. As long as you have vetted the business, you won't have to worry about anything for some years. The tenant will pay you the monthly rent, possibly depositing it in your bank. While you can drive by to make sure the place stays in good repair, everything is the tenant's responsibility. If you do find there is a problem with the place, contact the tenant and ask them to take care of it. If you decide you want to sell the property, you have the right to do so, as long as the new owner will accept the current lease. It is a very good way to invest in real estate.