Triple Net Financing

Triple Net Financing: What Investors Need to Know in 2025

Investing in Triple Net (NNN) properties can be one of the most passive and reliable ways to generate long-term income, especially for those interested in single-tenant retail, medical, or industrial assets. But while the property itself may offer stability, understanding how to finance a NNN deal is critical to your return on investment.

From interest rates to amortization schedules, loan-to-value (LTV) ratios to recourse vs non-recourse options, this guide will walk you through how Triple Net property financing works, what lenders are looking for, and how to structure your deal wisely.

Interest Rates: How They Are Priced for Triple Net Loans

Triple Net financing rates are generally tied to Treasury yields, specifically the 10-Year or 5-Year U.S. Treasury. Most commercial banks and lenders price their interest rates at a spread—commonly 150 to 200 basis points (bps)—above the corresponding Treasury benchmark.

For example:

  • If the 10-Year Treasury is at 4.25%, a lender might offer a rate at 150 bps above, which would be 5.75%.
  • Some banks use the 5-Year Treasury as their base, especially for 5-year fixed-rate loans.

In today’s environment (mid-2025), rates for triple net properties are typically falling between:

  • 6.00% and 6.75%, depending on:
    • The quality of the tenant
    • Lease term remaining
    • Property type and location
    • Your personal financials and credit
    • Loan-to-value ratio (LTV)
    • Whether the deal is recourse or non-recourse

Loan-to-Value (LTV): How Much Do You Need to Put Down?

The LTV ratio is a key component of any NNN loan. Most lenders will finance up to 65% to 75% of the purchase price for stabilized single-tenant triple net properties.

However, if you want better interest rates or non-recourse terms, you may need to put down more:

  • Standard LTV: 65%–70% (30%–35% down)
  • Non-recourse preferred LTV: 55%–65%
  • Institutional tenants with long leases (Dollar General, CVS, Starbucks) tend to receive the most favorable terms.

Putting down a higher equity amount improves your debt coverage ratio (DCR), which lenders use to ensure the rent covers the debt payments with a safe margin—usually 1.25x or higher.

Amortization and Loan Term Options

Triple Net loans are generally amortized over 25 or 30 years, meaning the monthly payment includes both principal and interest, calculated to pay off the loan over the full amortization period.

However, the loan itself is often fixed for only 5 or 10 years, after which it either balloons or resets:

  • 5-Year Fixed with 25- or 30-Year Amortization
  • 10-Year Fixed with 25- or 30-Year Amortization
  • Some lenders offer 20-year fully amortizing loans, often preferred for 1031 buyers seeking long-term stability.

Be mindful of prepayment penalties, especially yield maintenance or defeasance, which can significantly affect your ability to sell or refinance early.

Recourse vs Non-Recourse Financing

One of the most appealing features of commercial real estate lending—especially with NNN assets—is the ability to secure non-recourse financing. This means you are not personally liable if the property defaults, as long as you don’t commit fraud or other “bad boy acts.”

Lenders are more willing to offer non-recourse loans when:

  • You put 30%–40% down or more
  • The lease is long-term (10+ years)
  • The tenant is investment-grade or corporate-backed
  • The property is in a prime location
  • Your personal financials and real estate experience support the request

In some cases, partial recourse is required, or a “burn-off clause” is included where recourse drops off after a certain loan milestone (e.g., after hitting a 1.35x DCR for 3 consecutive years).

Which Properties Qualify for the Best Terms?

While many lenders offer financing for NNN properties, certain asset types tend to qualify for the best rates and terms. These include:

  • Pharmacies (CVS)
  • Discount Retail (Dollar General, Dollar Tree)
  • Quick Service Restaurants (Taco Bell, Starbucks, Wendy’s)
  • Medical and Dental Clinics
  • Auto Parts (AutoZone, O’Reilly)

Lenders feel comfortable with single-tenant NNN assets that have:

  • 10–20 years of lease term remaining
  • No landlord responsibilities (Absolute NNN preferred)
  • National or regional tenants with strong credit
  • High-visibility locations with long operating history

Riskier tenants (franchisees, mom-and-pops, or non-credit tenants) may still get financed, but often at higher rates and with full recourse.

Why Use a Mortgage Broker?

Financing commercial real estate—especially NNN—is complex. While some buyers try to go directly to a local bank or credit union, working with a qualified mortgage broker is often the smartest financial move you can make.

Here’s why:

1. Rate Shopping

Brokers can shop dozens of lenders, including:

  • National banks
  • Life insurance companies
  • Private lenders
  • Credit unions
  • CMBS lenders

This ensures you get the most competitive rate and terms available.

2. Negotiating Power

Brokers know how to present your deal to banks in the most favorable light—helping you secure better terms, more favorable amortization, or non-recourse treatment.

3. Loan Structure Advice

An experienced broker will guide you on:

  • Which term makes the most sense (5, 7, or 10 years)
  • Whether to go full amortization or accept a balloon
  • Whether to escrow for capital reserves
  • How to align your loan with your 1031 exchange timeline

4. Time Savings

Rather than calling 10 banks and filling out paperwork multiple times, your broker handles the heavy lifting—saving you time, money, and energy.

How Triple Net Direct Can Help

At Triple Net Direct, we specialize in helping investors find, evaluate, and purchase net leased commercial properties—and that includes helping you connect with trusted financing partners.

While we are not mortgage brokers ourselves, we maintain a curated network of lenders and brokers who know the net lease space intimately. Whether you’re buying your first Dollar General or expanding a portfolio of 15 Taco Bells, we can help match you with the right debt solution based on your:

  • Target purchase price
  • Loan-to-value preference
  • Credit strength and liquidity
  • Investment goals

Still, we always recommend working directly with a dedicated mortgage broker. That way, you can be confident that you’ve explored all your options and secured the best deal possible.

Real-World Financing Example

Let’s walk through a basic triple net financing scenario to illustrate how the numbers work.

The Deal:

  • Property: Single-tenant AutoZone
  • Price: $2,000,000
  • Lease Term Remaining: 12 years (Absolute NNN)
  • Tenant Credit: Corporate guarantee (BBB-rated)
  • Location: Florida

Financing:

  • Loan Amount: $1,400,000 (70% LTV)
  • Down Payment: $600,000
  • Interest Rate: 6.25% (based on 10-Year Treasury at 4.75% + 150 bps)
  • Term: 10 years fixed
  • Amortization: 25 years
  • Monthly Payment: ~$9,176
  • Annual Debt Service: ~$110,112
  • Annual Rent Income: $150,000
  • Debt Coverage Ratio (DCR): 1.36x

This deal would likely qualify for non-recourse, given the corporate guarantee, lease length, and borrower equity. The cap rate might fall between 5.75%–6.00%, giving the investor healthy leveraged returns.

Financing NNN Properties: Quick Tips for Success

  • Understand the lease structure—Lenders prefer absolute NNN with no landlord obligations
  • Secure financing early—Ideally before entering contract, especially for 1031 exchanges
  • Shop the rate spread—Know the current Treasury rate and negotiate the spread
  • Confirm prepayment penalties—Make sure you’re comfortable with exit options
  • Ask for non-recourse if possible—And be prepared to put more down to get it
  • Always use a broker—The savings and structure they provide are worth their fee

Final Thoughts

Financing a Triple Net lease investment isn’t difficult—but it does require planning, strategy, and a strong understanding of current market conditions. In today’s rate environment, most NNN loans fall in the 6.00% to 6.75% range, and your deal structure, credit profile, and tenant strength will all influence the final rate.

Whether you’re buying your first NNN property or scaling a portfolio of net leased assets, understanding how financing works is key to making smart investment decisions.

And remember: while Triple Net Direct can help you connect with lenders, your best bet is always to work with a seasoned mortgage broker to ensure you’re getting the best rate, structure, and long-term value for your investment.

Disclaimer: This content is provided for informational purposes only and should not be construed as financial, tax, legal, or investment advice. Always consult with a qualified mortgage broker, financial advisor, or legal professional before making any real estate investment or financing decision. Triple Net Direct does not offer loans or lending services.