Commercial guide · Michigan
A triple net lease, or NNN, means the tenant pays the rent plus the property’s three big operating costs: property taxes, building insurance and maintenance. Here is how that split works, what changes from lease to lease, and what to check before you buy or sign one.
The “nets” are the costs moved from the landlord to the tenant. In a single net lease the tenant pays the property taxes. A double net lease adds the building insurance. A triple net lease adds maintenance as well, usually including the common areas such as the parking lot and landscaping.
An “absolute” or “bondable” NNN goes one step further: the tenant also carries the roof and structure, and the rent keeps coming even if the building is damaged. Two leases can both be called triple net and still split the big repairs very differently, so the lease itself is what counts.
| Cost | In a typical NNN lease |
|---|---|
| Property taxes | Tenant |
| Building insurance | Tenant, either directly or reimbursed to the landlord |
| Routine maintenance and common areas | Tenant |
| HVAC repairs | Usually tenant; replacement is often negotiated |
| Parking lot repaving | Check the lease |
| Roof and structure | Landlord in many leases, tenant in an absolute NNN |
Because the tenant carries most of the operating costs, the rent is close to what the owner actually keeps. That makes the income predictable and the property easy to own from a distance. The trade off is that the value rests on two things: how strong the tenant is, and how many years are left on the lease.
In Michigan, a property’s taxable value is capped while one owner holds it, and the cap lifts when ownership transfers. The year after a sale, the tax bill can jump to reflect the current value. Under a triple net lease the tenant usually pays that higher bill, so check how the lease handles it and whether the tenant’s business can carry it before you count on the rent.
It means the tenant pays the rent plus the property taxes, the building insurance and the maintenance. In an absolute triple net lease the tenant also covers the roof and structure.
It depends on the lease. Many triple net leases leave the roof and structure with the landlord, while an absolute or bondable NNN puts them on the tenant. Read that clause before you buy.
They can. Michigan lifts the cap on taxable value when ownership transfers, so the bill often rises the year after a sale. Under a triple net lease the tenant usually pays it, which is why the lease and the tenant’s finances both matter.
Yes. Youssef works with investors and commercial clients in English and Arabic across Oakland, Macomb and Wayne counties. Call or text (586) 383-5070.
Youssef Sakar · Call +1 (586) 383-5070