Can anyone explain Triple Net Basis to me. Also what do you thank of this situation?
I have a house I have been renting for the past four years. I refinanced it a couple of years ago for the great interest rate with a 15 year mortgage. I only have a cashflow of $120 a month on this, but at the same time it will be paid off in “actually” 12 more years. What do ya’ll think???
Look to your left and click on Investing Glossary. Then look up Triple Net Lease.
In a triple net lease, the lessee takes full responsibility for payments as well as maintenance and repairs.
This is especially helpful if you triple net lease your own house and want to apply to buy another. The lender will not count your prior mortgage against your debt to income ratio because you have no responsiblity for maintenance and repairs and there is no vacancy factor.
In some states, such as Texas, you cannot have the tenant pay for “all” repairs. If this is in the lease, it will be illegal. Tenant’s here cannot pay for repairs that relate to health or safety. http://www.housing-rights.org/repairs.html
Sometimes, an out of town investor will try to use their lease and then get sued or lose in court when there is a dispute. We often recommend using a local attorney to CYA or the Texas Apartment Association lease. Most tenants are used to TAA leases, but it protects landlords very well (per my lawyers).
In a NARS landtrust, the tenant is also considered an owner under Federal law and by the IRS, as a Beneficiary of the Trust and therefore can pay for all repairs.
I just might need to look at that NARS landtrust thingy… ;). See you in Vegas?