Explaining triple net
Broker here. Been doing it for over four years. 

I was wondering if any of you had a go to phrasing for explaining Triple-Net leases. I understand them perfectly but sometimes with less sophisticated clients I struggle to explain them in a way that they can understand. Any tips? 
[{"id": "ejg2xjf", "text": "Just say they pay all the operating expenses, much like owning a house.  I usually clarify by saying anything on the inside of the four walls is the tenant's responsibility.  Roof leaks, water intrusion, and other exterior breaches usually covered by LL.\n\nTenant pays for their pro-rata share for ALL taxes, utilities, insurance, janitorial, and license fees.", "replies": [{"id": "ejgoqun", "text": "That\u2019s double net or NN where the LL is responsible for roof and structure. NNN= all expenses paid by tenant. I do CTL financing and find it amazing the level of misinformation regarding NN vs NNN.", "replies": [{"id": "ejgpe71", "text": "He asked for a simple way to explain it to an unsophisticated tenant. I tried.  You did not.\n\nLL would cover those expenses I described in most cases.  Lease language would protect the tenant from damage to personal expenses, and those repairs would be considered CapEx, and ultimately passed through to the Tenant anyway.  ", "replies": [{"id": "ejgplz5", "text": "&gt;LL would cover those expenses I described in most cases. \n\nNot in a true NNN lease.  \n\n&amp;#x200B;\n\nThe reality is most leases aren't true NNN, but that also depends on the type of building.", "replies": [{"id": "ejgr9no", "text": "Agreed.  That was the point of my \"simple\" example.  ", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}, {"id": "ejgrh78", "text": "Workerdrone is correct, the textbook definition excludes structure, roof, and management from the tenants responsibility. It is surprising the level of misinformation, what is your source? I'll also say I have seen NNN leases, absolute net leases, and any other variant over the years, and the nickname they are given can vary dramatically. My source is below:\n\n\"net net net lease. An alternative term for a type of net lease. In some markets,  net operating income (NOI or IO) a net net net lease is defined as a lease in which the tenant assumes all expenses (fixed and variable) of operating a property except that the landlord is responsible for structural maintenance, building reserves, and management; also called NNN lease, triple net lease, or fully net lease.\" - Dictionary of Real Estate Appraisal 6th Edition", "replies": [{"id": "ejifeql", "text": "NNN or NN is colloquially used in single-tenant investment brokerage and financing to describe what TheDetroitKid mentioned. When I used to work multi-tenant shopping center dispositions, the traditional definition applied. It is odd having to navigate between the two.", "replies": [{"id": "ejigvwe", "text": "I agree, I was just noting that Workerdrone had the correct definition. There is definitely differences between real estate literature and terminology used in the field. ", "replies": [{"id": "ejii2iy", "text": "Gotcha, without OP specifying terms I feel there will be a bunch of similar back and forth ", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ejg4wqt", "text": "You know how when you lease an apartment, you still need to pay for water and gas? It is like that, except you have to pay for taxes, insurance and maintenance, and also water and gas and trash. \n\nYou know how when you buy an ice cream from McDonalds, and it says 99 cents, but you have to pay 1.07, it is like that, except when I tell you it is 2.50 PSF a month, there is also 1.20 PSF a month on top of it. \n\nPlus the CAM fee, that is separate as well. Basically, if I need to explain this to you, it means you are too poor to afford it and you are not going to lease the space. \n\nNo, you cannot put a Mexican food place here, there is already a Mexican food place here. No, I am not going to tell you what type of business I think should go here, I am just leasing the space not helping you make career decisions. \n\nYes, even if you are a church or a school, I need to charge you rent. \n\nNo, if you rent the space you cannot also live here. \n\nJust because my name is on a sign in the parking lot, does not mean I am responsible if your car gets towed. \n\nI am a broker, not a property manager, I don't need to remove the homeless from the property. \n\nOK FINE, I Will remove the homeless from the property because otherwise I cannot lease this POS retail space. ", "replies": [{"id": "ejgozb2", "text": "He asked for a simple way.", "replies": [], "depth": 2}, {"id": "ejgppwb", "text": "PREACH", "replies": [], "depth": 2}, {"id": "ejwva3j", "text": "This man leases.", "replies": [], "depth": 2}], "depth": 1}, {"id": "ejg5bgh", "text": "The \"nets\" are who pays for CAM, Taxes, &amp; Insurance...and also utilities.\n\nThe lingo follows that the baseline is the Landlord pays for everything. \n\nBut if it's a Single net, the tenant pays for 1 of the three. Double net...2 of 3 and so on. And then you can get to absolute net where the tenant pays for absolutely everything, including any and all exterior and ground repairs etc.\n\nIf it's a mix mash of various single / Double net structure it's often just called a 'modified net'\n\nIt's not that different from a basketball double double, tripe double, triple single etc and so on.", "replies": [], "depth": 1}, {"id": "ejg93tv", "text": "NNN leases--\n\nTenant pays all expenses. \n\nLandlord pays none. \n\nThat simple", "replies": [{"id": "ejghdl5", "text": "That mailbox check baby ", "replies": [{"id": "ejh5jbw", "text": "Well the LL/property manager still has to run the property, the LL is reimbursed for those expenses. Ground leases are mailbox money", "replies": [{"id": "ejhun45", "text": "What about STNL absolute NNN?", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "ejh39zp", "text": "Nope, that\u2019s absolute net.  NNN is all expenses other than structural repairs.", "replies": [{"id": "ejiphdw", "text": "NNN pays for all operational expenses. Capital expenditures are a different expense category from  an accounting perspective. I'l'l add as well that \"absolute net\" is not a term that is frequently used in the NY and surrounding area middle market. At least in the 5 boroughs", "replies": [{"id": "ejisgzf", "text": "It's used extensively for net lease transactions nationally.  Meaning from the landlords perspective, they're on the hook for capital expenditures, and yield requirements are different.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ejga7bc", "text": "On top of the base rent, tenant pays for all their utilities and their proportionate share of ALL of the building\u2019s expenses. The base rent is essentially how much the landlord is \u201cnetting\u201d in income ie net rent aka NNN rent.", "replies": [{"id": "ejk16ol", "text": "I kinda disagree with this because then you place the simple minded tenant under the assumption that base rent is the landlords net income, which it obviously isn\u2019t. ", "replies": [{"id": "ejk6elk", "text": "Why isn\u2019t it? That is that entire concept of net rent. ", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ejgitj4", "text": "We call it FRI. Full repairing  and insuring in the UK. Does that help? \ud83d\ude09", "replies": [], "depth": 1}, {"id": "ejgpinc", "text": "\"you are responsible for everything as if you owned the building\"", "replies": [], "depth": 1}, {"id": "ejgrd5v", "text": "Rent is for occupancy.  TT also responsible for everything else at cost.  ", "replies": [], "depth": 1}, {"id": "ejhw7bp", "text": "The base (NNN) rent is what goes in the landlord's pocket (landlord pays debt, reserves, etc...but that is still from his \"pocket\").  Simple as that.", "replies": [], "depth": 1}, {"id": "eji7l5i", "text": "CLO here. \n\nMy go-to super simple explainations are: \n\nWhat is a Gross Lease?\u00a0\u00a0 In a Gross Lease, the Tenant\u2019s monthly rent payments are \u201call in\u201d to the Landlord, the Tenant does not make any additional rent payments. Gross rent is typically pre-determined and fixed for the length of the lease. \n\nWhat is a Net Lease?\u00a0 In a Net Lease, the Tenant\u2019s monthly rent is made up of base rent (which is the Landlord's \"profit\"), its share of all operating costs (ie. snow removal, landscaping, insurance), and property taxes for the building where the Premises is located. The base rent is typically pre-determined and fixed for the length of the lease, whereas the other costs are variable and may change year over year. \n\nThe biggest issue people have with any kind of net lease is understanding why rent is made up of multiple different parts and why the rent isnt a fixed amount. \n\nHope this helps. \n\n\n", "replies": [{"id": "eji8f4m", "text": "This is probably the most helpful. Seems like most people misread my question and were almost explaining NNN to me, which I understand. I just needed help dumbing it down ", "replies": [{"id": "ejl9ydl", "text": "Your original question just highlighted the fact that the terms are unavoidably squishy and often context dependent.   ", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ejm06ba", "text": "Hopefully I am not too late on this, but I found this post pretty helpful on everything related to [NNN Properties](https://hardmoola.com/nnn-properties)\n\nIt's long but it covers a lot", "replies": [], "depth": 1}, {"id": "ek2i6bc", "text": "To a tenant: \"It's where you have all the responsibilities of an owner, without owning it. You pay maintenance, operations, taxes, utilities, everything, as if you owned it, usually excluding some structural repairs. It may include a roof as well, flood damage, etc. It can give you, the tenant, more control over the building, like an owner would have. But instead of buying the building, you pay the landlord to take it over for the time you occupy it. You pay much less in rent, but you will not be able to call the owner with problems, since it's all your responsibility. This is different than a lease you'd sign on an apartment, because while you're paying more, it's the owners responsibility to pay taxes, maintnence, paint, floors, etc \"\n\n\nTo an owner: \"Finding an NNN tenant means that you have lower risk, because unexpected expenses are not your responsibility, but the money is constant, and you're just trading risk/reward. A NNN tenant will pay you less monthly, but you will not be responsible for property tax, maintenance, paint, utilities, landscaping, property management, etc.\"\n", "replies": [], "depth": 1}]