Triple Net Leases and 1031 Exchange: An Interview with Alan Fruitman

We recently had the opportunity to talk Triple Net leases and 1031 with Alan Fruitman — a 25-year veteran of the real estate industry and a specialist in NNN (“Triple Net”) properties. Alan is the author of The NNN Triple Net Property Book and the founder of, which maintains a subscription-only NNN property list, updated and sent to clients daily.

NES: Could you briefly describe for our readers what a Triple Net lease is, and what its appeal may be to property owners?

AF: A Triple Net lease refers to a property in which the tenant maintains 100% of the taxes, insurance and maintenance.

NES: So the usual landlord’s headache, getting the phone call saying, “The air conditioning broke,” or “The faucet’s running,” or any similar complaint… that’s all the responsibility of the tenant?

AF: That’s correct. There’s no maintenance — including roof, HVAC, parking lot, plumbing, electrical. None of these items are the landlord’s responsibility under an absolute NNN lease.

NES: Who are the tenants you see most often for Triple Net leases?

AF: Most Triple Net tenants are Fortune 500 companies — the same companies you see when you drive down the road. These include, for example, Walgreens or CVS, Walmart or Target, Chase Bank or Wells Fargo, McDonald’s or Panera, Dollar General, AutoZone, Home Depot… all of the national tenants you see and visit are the same tenants that I sell.

NES: So retail, generally.

AF: There are some industrial and office Triple Net properties, but the majority are retail.

NES: What are common lease structures for Triple Net properties?

AF: Most have a primary term between 10 and 20 years, with multiple five-year renewal options. And most properties have a built-in rent increase every five years.In addition to the “no maintenance” aspect of Triple Net leases, this is the biggest draw — there’s no management, no vacancy, no renegotiation. It’s all predetermined.

NES: Alan Fruitman, you literally wrote the book on Triple Net Leased Property. Let’s talk about The NNN Triple Net Property Book. Who do you think will get the most out of reading it?

AF: Any investor that wants passive income — because with Triple Net, you know exactly what you’re going to get. When you buy a multi-tenant property, with a short-term lease, there’s always a big question mark on what happens when the tenant’s lease expires in a few years; or if taxes go up, how it’s pro-rated; or if the roof needs repair, whose responsibility it is. None of these are questions when you own a Triple Net property. And, specifically as it relates to 1031 exchange, people that sell management-intensive properties — such as an apartment building, or office building, or strip center — people can 1031 exchange out of those management-intensive properties, and into Triple Net property.

NES: So an investor would be eligible for a 1031 exchange when selling a property they’re managing normally, and buying a Triple Net property?

AF: Absolutely. No problem.

NES: It’s been a few years since we last spoke with you for an NES Financial blog. Has anything changed in the Triple Net space since we last talked?

AF: There’s probably more demand now than there ever has been. As baby boomers age and professionals are less tolerant of tenants, and toilets, and management, demand just goes up. Everybody wants high-net-worth tenants with long-term leases and prominent retail locations. And that recipe only gets more and more desirable over time. There’s really no other property, other than Triple Net, that provides true passive income for ownership. (There’s fractional ownership, but I’m not a fan of those, so I don’t sell them.)

NES: What is your relationship like with NES Financial?

AF: I’ve been involved with NES Financial since they acquired J.P. Morgan Property Exchange in 2008. And I was involved with JPEX for at least four or five years before that. Whenever I see that a client could benefit from a 1031 exchange, I refer them to NES to help them facilitate the process. Your 1031 Exchange Solutions are proven to work on any type of property or deal size, and I can rest assured knowing your team of experts will get the job done right. You guys have a lot of industry knowledge, and you’re easy to work with.

NES: Thanks for taking the time to speak with us, Mr. Alan Fruitman.

AF: My pleasure!

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2019-12-09T13:25:47-08:00September 13th, 2017|Categories: 1031 Exchange, Blog|Tags: , , |