5 Lease Types

1. Fixed lease

  • Pay monthly rent, some utilities, and nothing else.
  • Landlord pays taxes, insurance, maintenance, and sometimes utilities.

2. Net lease

  • Monthly rent + percentage of other expenses (tax, insurance and maintenance).
  • The portion of other expenses is based off the size of the space rented.
  • cost increases over time.
  • 3 main forms
    • Single net lease – N lease, tenant responsible for one extra expense.
    • Double net lease – NN lease, tenant responsible for two extra expenses.
    • Triple net lease – NNN lease, Tenant is responsible for three major expenses.

3. Percentage leases

  • Tenant pays base rent + percentage of gross income (when exceeding a threshold).
  • Some percentage leases will not have a base rent and simply be composed of a % of income.
  • This can be a great option for those who have peaks in business and then slow periods.

4. Modified gross lease

  • Customisable leases that fit both the landlord and tenant.
  • When signing onto a modified gross lease take extra caution.

5. Absolute NNN lease

  • The tenant is responsible for all costs.
  • Tenants pay fixed rent, the share of property taxes, maintenance, and insurance.

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