Triple Net (NNN) Lease Cap Rate Calculator
Triple Net (NNN) leases shift property taxes, insurance, and maintenance to the tenant — making them the most passive real estate investment. Calculate the true cap rate adjusted for tenant credit, lease term, and reserves.
| Going-in cap rate (rent / price) | — |
| Net cap rate (rent − reserves / price) | — |
| Year-10 rent (escalated) | — |
| Year-10 cap rate (price stays) | — |
| Credit adjustment | — |
| Credit-adjusted effective cap | — |
Triple Net (NNN) leases pass operating expenses — property taxes, insurance, and maintenance — to the tenant. The landlord receives base rent with minimal management responsibility. NNN investments are popular with passive investors and 1031 exchange buyers because they function more like fixed-income bonds than active real estate.
Why Cap Rate Isn't the Whole Story
NNN cap rates look attractive but depend heavily on tenant credit. A 7% cap on a Walgreens lease (BBB rating) trades like a corporate bond. A 7% cap on a regional retailer is dramatically riskier — you could see a 30-50% value drop if the tenant defaults. Adjust cap rate by 75-200 bps for non-rated and sub-grade tenants.
Lease Term Risk
NNN leases typically run 10-20 years with 5+5 year options. The cap rate compresses as lease term decreases — under 5 years remaining, you're pricing re-leasing risk. Sub-3 years = high risk; lender financing becomes difficult below 5 years. Always check lease term plus tenant intent to renew.
Escalations Matter
Flat rent = declining real returns. CPI escalators protect against inflation but cap at 2-3% in most leases. Fixed 1.5-2% annual escalators are most common. Check escalation terms — some 'increases' only kick in at option periods, not every year.
Last updated May 2026. Sources: NAR Commercial Trends, CBRE Cap Rate Survey.