NNN Properties : An Ideal Source of Passive Income

NNN 1031 properties are the best option to invest when the investor or taxpayer does not want to have a burden of the property

NNN 1031 properties are the best option to invest when the investor or taxpayer does not want to have a burden of the property because of their busy schedule and wants to have a relaxed life. We know that in the present scenario buying properties requires only money, whereas managing them requires money as well as time.

Are you bored with the cost of the wear and tear of the property? Today in this article, we will help you in finding the best option for yourself. You can rent the property rather than selling it. NNN 1031 properties are the best options to engage. Therefore before renting the property, the taxpayer or the investor must understand the 'triple-net lease' investment.

IRC section 1031 says that under this an agreement is signed between the owner and the tenant known as the 'NNN Lease' agreement. Under this lease, all the expenses along with the base rent, are handled by the tenant of the property. In 'NNN lease,' NNN stands for net-net-net. NNN lease allows the owner to get relief from the burden of paying the maintenance cost of the property. This is a perfect option for generating a steady flow of income without spending any money on the property. Under this, the tenant is responsible for paying expenses like insurance, utilities, etc. The base rent of the property under 'Triple net lease' is less than the property under gross net.

'Single-net lease' is the agreement under which tenant pays the property tax or one additional property expense along with the base rent of the property.

'double-net lease' is the agreement under which the tenant of the property pays the taxes on the property along with the insurance fee of the property.

'Triple-net lease' is the agreement under which the tenant of the property pays the property taxes, insurance, and maintenance cost of the property. These are also known as 'three-nets.'

Benefits of ‘NNN lease’ investments:

1. Under this investment, all the major expenses of the property are covered by the tenant allowing the owner of the property to be relaxed.

2. This investment generates a steady flow of income for the property owner.

3. ‘NNN lease’ agreement allows the owner to defer the capital gain taxes in the 1031 exchange and reinvest the proceeds of the old property to buy a new property.

4. These are mostly preferred by the investor, but there are few benefits for a tenant like the base rent under ‘NNN lease’ is comparatively less than the properties under gross rent.