Lease agreements between a lessor and lessee are usually legally binding. Thereby, every part of the agreement should be without fault or a loophole. This applies to extra property expenses too. Some of the frequently lease contracts established are commercial lease contracts of which the lessee is a tenant renting property for commercial purposes. Being a commercial environment, every coin spent is accounted for and therefore the landlord ought to do proper math when it comes to the net rent paid to avoid any sticky confrontations with the financially enlightened tenant. As a result, lessors have turned to using a Net Lease Calculator for proper valuing.
Net lease
In commercial real estate, unavoidable expenses are considered when determining the rates to be paid and net rent due. The stated expenses are property taxes, insurance and maintenance which are usually referred to the three nets. Based on the terms agreed upon, there are different types of cumulative leases available for a commercial tenant which include:
N lease
This is a single lease whereby the lessee has an obligation to pay the property taxes. The landlord takes care of the other nets and this results to a higher property rent.
NN lease
It is a double lease in which property taxes and insurance premiums are transferred to the tenant. The lessor is only responsible for any maintenance and repairs. The rent is usually fairly lower compared to the N lease.
NNN lease
The triple lease has the lowest rent of the three leases and all expenses are catered for by the tenant.
Ground lease
A variant of the NNN lease whereby the owner of the land rents out bare land and the tenant constructs a structure on it. However, despite the fact that the tenant built the building, once the lease term is over, building and land ownership reverts back to the lessor.
Net Lease Calculator, before one makes a decision on the type of terms to lease by, it is best if the numbers are worked out to determine which is the most profitable term. A calculator designed to calculate commercial rent usually works out the rent, rate, area, operational expenses and base rental rates so as to determine the annual rent. Generally, commercial rent is calculated on a price per square foot basis, giving ample room for spaces to be divided or combined. Commercial real estate bears no single lease structure.
