Net Lease

A net lease shifts some operating expenses from the landlord to the tenant. A single net lease passes property taxes, a double net adds insurance, and a triple net (NNN) adds maintenance as well. Under a triple net lease most expenses leave the landlord's statement, so NOI comes close to the rent itself.

The lease type decides which lines appear in your NOI. The default house on a standard residential lease carries $10,230 of expenses against $28,500 collected, an expense ratio of 35.9%. Put the same house on a triple net lease at the same rent and taxes, insurance and maintenance move to the tenant. NOI rises toward the $28,500 collected, less management and reserves.

That is why a 6% cap rate on a triple net retail building and a 6% cap rate on a duplex are not the same risk. The retail landlord's NOI is close to gross rent, and the tenant absorbs expense inflation. The Wikipedia article defines the three nets and the bondable lease, the version where the tenant carries every cost including rebuilding after a loss.

Further reading: Net Lease on Wikipedia.