The main difference between a gross lease and a net lease is that in a gross lease the landlord is responsible for paying the operating expenses, while in a net lease the responsibility of the operating expenses falls on the tenant.
What are examples of pass through expenses?
A simple way to think of pass-throughs is to consider them as any expenses required to operate a property that are not the base rent. Typically pass-through expenses include things like Common Area Maintenance (CAM), property taxes, insurance, utilities, janitorial, security and supply costs.
What is an example of a net lease?
Net Lease ExampleUnder a triple net lease, the tenant pays property taxes, insurance, and maintenance costs, plus their monthly rent payment. Property taxes on the building are $1,000 per month, insurance premiums are $500 per month, and maintenance costs are $500 per month for a total of $2,000.
What is the most common commercial lease agreement?
A net lease is perhaps the most common form of commercial lease agreement. With a net lease, the tenant is responsible for a base rent payment, plus additional expenses associated with the property.
What is the benefit of a net lease?
Net leases require tenants to pay expenses such as taxes or insurance in addition to a monthly rent payment. Rents are generally lower with net leases than traditional leases. The more expenses a tenant has to bear, the lower the base rent a landlord charges.
How do you calculate the value of a commercial lease?
The most basic equation for calculating a lease payment takes the number of square feet times the cost per square foot, then amortizes that over a 12-month span. For example, if you have 1,000 square feet and the cost per square foot is $12, the annual lease amount would be $12,000.