What a NNN restaurant pad actually requires from the owner once it closes
Take a freestanding QSR pad, about 2,400 sf, on a commercial strip in a mid-size southern market, purchased at $1.18m with NOI of $74,500, a 6.3 cap. 11 years left on the lease, corporate guaranty from a franchisor with a public credit rating, 10 percent bumps every five years. The part worth understanding clearly before buying: when a lease says the tenant handles taxes, insurance, and maintenance, that can be close to literal. The tenant pays the county directly and sends the owner the receipt. In a clean quarter, ownership can mean opening a bank account for the rent and forwarding a certificate of insurance to the lender, and not much else. Where this gets misunderstood is the roof and structure. NNN does not automatically mean the tenant covers everything. Some leases put roof and structure on the landlord, which makes it a net lease but not the fully absolute kind. An inspection finding six years of remaining roof life against a lease that assigns roof to the owner should show up as a credit at closing, often against a full replacement estimate rather than the remaining-life estimate, which is a gap worth pricing before the offer goes in rather than after. The lesson holds generally: read the whole lease to find out which version of NNN is actually in place, because the label alone doesn't answer it.
