In every locality there are apartment buildings that are becoming neglected. Because of the deteriorating condition of these buildings, rents are low. Your mission, if you choose to accept it, is to find a tenement that needs primarily cosmetic repairs - painting, cleaning, landscaping, carpeting,etc. - and strike a triple net lease agreement with the owner.

Under a triple net lease (also known as "nnn"), you agree to manage the property, rent the apartments, maintain the building, and pay all costs, including taxes, insurance and mortgage. In short, the owner becomes a silent partner who is no longer bothered by the hassles of being the landlord. In exchange, you agree to pay him an amount almost equal to what his NET income from the building currently is. This lease should be for a minimum of 5 years, allowing you time to create a large profit for yourself.

Your profit comes from making the necessary repairs, increasing the value of the property, and streamlining management to reduce expenses. However, these "nicer" apartments will command a higher rent, and will attract more tenants, keeping the building full. This additional rental income is your profit.

Let's say you find a 6 unit building worth $100,000. Rents are $350/month per unit, but the vacancy rate brings actual average income down to $1800/month. Mortgage, tax, insurance, water, plowing, maintenance and all other costs to operate the building currently run at $1400/month. The owner is therefore making $400/month, has all the hassles, and his building is deteriorating from neglect.

You offer a Triple Net Lease in which the owner is relieved of all the work and hassle. You will pay the owner a flat $300/month for which he needs to do absolutely nothing.

With a little effort and the $100/month you are making, you fix the placeup, one apartment at a time, then rent each one out for $400/month. Eventually, your efforts result in a full building with monthly income of $2400. Your better management has reduced expenses to $1300 per month. The owner still gets only $300. You are now earning a net income of $800/month for about a few hours a week of your time.

Do this with 5 buildings and you now have a full time job that nets you $4000/month - $48,000 a year.

Of course, your triple net lease could include an option to buy in 5 yearsat a price slightly higher - about 10% - than its current value, with a portion of your $300/month payment - perhaps 50% - to be applied to the down payment. Now, in 5 years, your efforts have resulted in the building being worth $130,000.You buy it for $110,000 less $9,000 already paid as a down payment (that portion of the $300/month you have been paying the owner which is applied to the purchase price). With a $101,000 mortgage you own a $130,000 building. Your equity is $29,000 - all profit to you, in addition to the income you have been earning. You now own a valuable building that brings in an income, or at the very least is paying for itself. Meanwhile, your $29,000 equity could be put to work earning you more money, or getting you another building. If you have, indeed, done this with five buildings, realize that your equity is a total of about $145,000, in addition to the $48,000/year you have been earning.

With a triple net lease, you need no cash or credit, but experience would be helpful in convincing the owner to accept your offer. With a little effortand ingenuity, you could make a lot of money, especially when you consider that you can usually increase the rents each year or two, due to inflation and the cost of living. Within 5 years your income could easily exceed $50,000,even with such small buildings. With larger buildings - 20 units or so -your income could be over $100,000/year.

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