The complete guide to triple-net (NNN) leases for small landlords

What “triple net” actually refers to

The three “nets” are real estate taxes, property insurance, and common-area maintenance. Under a true NNN lease, the tenant pays base rent plus their pro-rata share of all three—the landlord's rent is “net” of those three cost categories, rather than having to cover them out of rental income.

This is different from a lease where a tenant reimburses only CAM (sometimes loosely called “net” or “single net”) or CAM plus one other category (“double net”). Precision here matters because the reconciliation math and what's actually recoverable differ by exactly which “nets” the lease specifies.

NNN vs. gross vs. modified-gross

A gross lease bundles taxes, insurance, and CAM into one flat rent figure the landlord absorbs the risk on. A modified-gross lease sits in between—often using a base year and expense stop, where the tenant only pays the increase in operating expenses above what they were in an agreed base year, common in medical and professional office leases.

NNN shifts essentially all of that cost risk to the tenant, which is why it's the dominant structure for retail and industrial space, while offices more often use gross or modified-gross terms.

What a small landlord needs to track under NNN

Each of the three nets needs its own clean record: the tax bill (and any reassessment), the insurance premium (and any policy change), and the CAM pool (recoverable expenses, exclusions, and each tenant's pro-rata share). All three roll into the same annual reconciliation, but they come from different source documents and different timing—a tax bill and an insurance renewal rarely land in the same month as the CAM year-end.

• Real estate tax bill and any mid-year reassessment
• Property insurance premium and renewal terms
• CAM pool: recoverable expenses, exclusions, and caps
• Each tenant's pro-rata share (usually by square footage)
• The reconciliation period and each tenant's notice date

Common NNN variations worth knowing

“Absolute NNN” (sometimes called a bondable lease) pushes even further—the tenant may also be responsible for roof and structural repairs, categories a standard NNN lease usually still leaves with the landlord. It's most common in single-tenant net-lease deals (a freestanding retail building, for example), less common in a multi-tenant strip mall or shopping center.

Where NNN landlords get tripped up

The most common mistake isn't math—it's timing and follow-through: treating the monthly estimate as the final number and never running the actual reconciliation, missing a tax reassessment until the bill already reflects it, or letting an insurance renewal lapse into a different coverage without updating what's recoverable.

What still needs a person

Negotiating which “nets” a specific lease includes, whether it's absolute NNN, and how disputes over an unclear category get resolved are all negotiated lease terms—an attorney's job when drafting or reviewing, not a calculation.