Hopefully by now you at least understand some of the basics of triple net lease investing.  If not – BUY THE COURSE.

Lately there has been a lot of discussion on green leases.  Essentially these are leases where the tenant is incentives in some form to operate the facility in a more environmental friendly way.  The structures vary but this could be in the form of using less water, less lights, etc.

Here is a more detailed example of how a green lease could add value to your triple net lease property:

Suppose an owner’s operating costs for his office building are $9.50 per square foot and assume energy costs are $2.00 of that, or about 20%. If the owner makes the building more energy efficient, reducing his operating costs by 40%, he will be saving .80 cents per square foot (.80 cents = 40% of $2.00). In a Net Lease arrangement (where the tenant pays for all electric/energy charges) the owner does not have an economic incentive to make these investments because the savings go to the tenant, as opposed to his bottom line. However, by shifting from a Net Lease structure to a modified “green Gross Lease” approach, where the tenant pays a rent that has certain expense items, such as water and electric, built in, the duty of responsibility for managing these costs can be shifted away from the tenant and back to the landlord, who reaps the benefits of his capital improvements and the efficiencies/savings they produce.

Indeed, from an owner’s perspective, by having the right type of green lease in place, the resulting efficiencies will produce value in both the short and long term. By capitalizing (or “capping”) the .80 cents of energy savings at a 11% cap rate (or expected return) you’ve created about $7.27 in additional value per square foot for your building. Do this with a 100,000 square foot building and that small improvement has added $727,000 of value to your property.

There are ways to integrate a green lease with a triple net lease that we will discuss in another blog post.

First off you should know I’m extremely biased.  My mom was a teacher and my step-dad was a professor.  I’m biased in that I think investing in education is the single biggest factor in upward economic mobility.  I have been very fortunate in my career and have sold a business and have some more businesses that have fairly regular monthly cash flow with me doing very minimal work.  This would not have been possible without constantly educating myself on all of the opportunities available.

Sometime I have invested in a course and only used the material once in the past five years.  However, that material has made the difference between me working for a company and me owning my own company.

This education is the difference between me asking for vacation days to now I vacation when I want to.  I’m not being arrogant.  I work hard.  The only difference is I work hard when I want to.

This is why I helped create this course.  You may decide after you finish this course on Triple Net Lease properties that you don’t want to be a part of this niche in commercial real estate.  But who knows, ten years from now you might.  Even then though, at least you can be educated.  Who knows maybe you will be a business owner and be involved with a commercial real estate owner that has a triple net lease.  The possibilities are endless.  The point is that YOU WILL BE EDUCATED after taking this course.

Every quarter one realtor I work with sends me a spreadsheet of the properties that he is recommending in the Southeastern section of the United States.  Every quarter the properties change by about 20%.  However, this realtor recently sent me a spreadsheet with about as many properties as normal – however these are properties that he has received request bids for just in the past month!

This is a major event.  This tells me that the market is very healthy.  That there is a very healthy supply of new, high quality properties with high quality tenants for investors looking to get into triple net lease investing.

By the way – we list several realtors in the Triple Net Lease course that you can use that specialize in Triple Net Lease Properties.

As explained in the Tiple Net Lease course - working with a realtor that specializes in Triple Net Leases can greatly reduce your workload as a real estate investor.  As a buyer, I have never had to pay the traditional realtor fee as usually the seller pays this.  Additionally, one of the best triple net lease deals I have ever seen came from one of the brokers I stay in-touch with.

The tenant was a publicly-traded company that was actually doing very well in the recession as the business they were in was counter-cyclical.  The best (or at least most interesting) part of this deal was that the building wasn’t even built yet!  The builder had struck the deal with the tenant.  After acquiring the land, the builder fell on financial distress.  The builder therefore HAD TO SELL the property with a premium tenant to get funding from the bank.  The triple net lease investor could purchase the property once the tenant occupied the property.  Therefore, the triple net lease investor was not exposed to any tenant risk (owning an empty building) or building risk (as a developer has).  Additionally, the investor was able to get a great deal knowing the developer (builder) was in distress and the bank was requiring the property to be sold.

This case study is laid out in better detail in the course Three Net Lease Profits.

The important part of this case-study is that I would not have known about this property if it hadn’t been for knowing a realtor specializing in commercial property.