Info Center Real Estate Hub Book Reviews F.A.Q. Rental Glossary
Home » Info Center » Commercial Property Rentals with Triple-Net Leases

Commercial Property Rentals with Triple-Net Leases

Commercial property rentals in Montreal with triple-net leases offer high returns for a comparatively little management. The main motive behind the triple-net lease is to have the tenant pay not only the rent, but also the maintenance costs, insurance, and taxes that go with the rental property. This type of investment is quite common in commercial rental real estate.

The triple-net lease delivers, more or less, a guaranteed return for the property owner. The owner isn’t affected by rising property taxes or insurance rates, because the tenant is responsible for these in addition to the maintenance costs.

Advantage of Commercial Tenants

Commercial tenants have a vested business interest in ensuring their commercial rental space is consistently in good condition and attractive to their customers. With this kind of investment, your tenants have an incentive to make sure your rental space is maintained and even enhanced over time.

This is another reason why many commercial property owners prefer the triple-net leasing option. The property can generate a high level of income while the tenant keeps it in good condition, occasionally making improvements to the space as well.

As well, mortgage loans at favorable rates are possible if you have long-term triple-net leases with commercial tenants that have credit ratings.

Risks with Triple-Net Leases

However, having a Montreal commercial rental property with a triple-net lease can be risky as well. It takes time and effort to find the right tenant for your commercial property. There’s a real possibility that you can have negative cash flow on vacant properties for as long as a year at a time.

If you don't have funds to cover periods of vacancy, you may end up losing the commercial property as well as your investment. This is one of the reasons that there are relatively few investors who pursue these kinds of deals. You also have to face fluctuations in the Montreal real estate market, an inherent risk as well as expenses associated with speculative investment strategies.

Of course, having few investors means less competition. And when you do get a good commercial tenant on a long-term triple-net lease, you can enjoy the cash flow without the usual headaches of being a landlord.