Triple Net (NNN) Leases

NNN leases let you pass building operating expenses through to tenants based on each suite's share of the leasable space.

What is a triple net lease?

In a standard lease the landlord absorbs operating costs - insurance, utilities, repairs - as expenses. In a triple net (NNN) lease, those costs are billed back to tenants in proportion to the space they occupy. Rental Flow automates the math and creates the charges for you.

Setting up a commercial building

NNN is available on commercial buildings. Open the building and fill in two square footage fields:

Sq Footage - total building square footage including common areas.
Sqft Common - lobbies, hallways, restrooms, and any space not leased to a specific tenant. The ft² Leasable field calculates automatically (Total - Common).

Each tenant's NNN share is their suite's square footage divided by the total leasable space. A 3,000 ft² suite in a 10,500 ft² leasable building pays 28.57% of every common-area expense.

The NNN breakdown table

Below the square footage fields, the building page shows a breakdown table with one row per suite:

NNN Breakdown - Oakwood Commerce

Suite Sqft Calc % Effective %

Suite 100

Mark Holloway

3,000 28.57% 28.57%

Suite 200

Sandra Cho

4,500 42.86% 42.86%

Suite 300

Vacant

3,000 28.57% 28.57%

Total 10,500

Calc % is the formula result: suite sqft / leasable sqft. Effective % is what actually gets charged - the same as Calc % unless you have set a manual override on that suite.

Vacant suites are shown in the table but their expenses are automatically postponed rather than posted, since there is no active tenant to charge.

Recording passthrough expenses

When you add an expense to a commercial building (or one of its suites) you can set the Passthrough field:

Landlord only - the expense is yours, not billed to tenants. Default for all expenses.
Common area - split across all occupied suites by NNN percentage. Use this for insurance, water, electricity, landscaping, snow removal, etc.
Direct to suite - 100% to one specific suite. Use this for repairs that benefit only that tenant, such as an HVAC unit in their space.

Posting expenses to tenants

Passthrough expenses accumulate as pending until you post them. Open the building and tap Post Expenses to Tenants. A review dialog shows every pending expense:

Post Expenses to Tenants

Common Area Electric

Common area • $620.00 • Jun 1, 2026

Suite 100: $176.94
Suite 200: $265.71

Approve Postpone Skip

Common Area Water

Common area • $180.00 • Jun 1, 2026

Suite 100: $51.43
Suite 200: $77.14

Approve Postpone Skip

For each expense you can:

Approve - create the charge on the tenant's ledger immediately.
Postpone - hold it for next time you open the dialog.
Skip - mark it as not billable. It will not appear again.

You can also edit the description before posting - for example changing "Common Area Electric" to "June 2026 NNN Electric".

How charges appear on the tenant ledger

Posted NNN expenses create charges on each tenant's income page. The charge shows the calculation so there is no ambiguity:

Tenant Ledger - Mark Holloway (Suite 100)

NNN Passthrough

NNN Common Area Electric ($620.00 * 28.57% = $176.94)

$176.94

NNN Passthrough

NNN Common Area Water ($180.00 * 28.57% = $51.43)

$51.43

Overriding a suite's NNN percentage

Some leases negotiate a fixed NNN percentage rather than using the square footage formula - for example a tenant may have negotiated 30% regardless of suite size. Open the suite's unit record and enter the override percentage. The Effective % column in the breakdown table will show the override in bold, and the formula-calculated percentage will still be visible in the Calc % column for reference.

An override only affects future postings. Charges that have already been posted are not recalculated.

Frequently asked questions

What happens to vacant suite expenses?
When you post a common-area expense, any share that would go to a vacant suite is automatically postponed. The other occupied suites still get their portion. When the suite is leased again the postponed expense will reappear in the dialog.

Can I post the same expense twice?
No. Once an expense is posted it is locked and will not reappear in the dialog. If you made an error, go to the tenant's income page, delete the NNN charge, then contact support to reset the expense status.

Does NNN work for storage facilities?
The passthrough feature is available on any building type that has suites or bays with square footage set. Storage facilities with individual bay square footages will work the same way.

What if the percentages don't add up to 100%?
They often won't - vacant suites are excluded and square footage percentages are rounded to two decimal places. The amounts posted to each tenant are calculated independently from the full expense amount, not from each other, so rounding differences stay small.