When you are deciding to rent your commercial property for business, there are three main lease options that you can choose from:
- Gross Net Lease - If we talk about gross net lease, the landlord is responsible for paying property taxes, property insurance, and building maintenance cost. In this type of lease, monthly rent is comparatively very higher because the owner is taking care of all the major expenses made on the property.
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- Percentage Net Lease – It is an agreement where the tenant pays the basic rent along with paying a certain percentage of the net sales volume every month. This type of lease is more common in retail malls or shopping outlets. The amount that the tenant pays depends on the sales and should not take a percentage of all sales made in that month. For example, an agreement can be reached where the tenant needs to pay 5% of all the sales that exceed $30,000 a month.
- Triple Net Lease - In a triple net lease, the lessee needs to pay all the costs for a commercial property he/she is going to own for a specified period of time. That means, along with the rent, the lessee is liable to pay the taxes, maintenance costs and insurance to the owner. In this type of lease, once the agreement is signed, the owner does not hold any responsibility for the upkeep of the property. This type of lease is generally preferred for commercial properties and businesses.
So, if you have a commercial property and you are planning to rent that for a particular period of time, you can consider taking triple net lease. Here are five points to help you decide why?
Five Points that you should Consider Taking Triple Net Lease
- Minimal Costs – As an owner when you have a commercial property with you that is not helping you make much profit, you can think about giving that on the lease to move your business to some other place. So technically, when there are not many profits being made, all the maintenance expenditures will cost you your savings. As soon as you find a lessee, he/she will bear all the costs like rent, insurance, taxes and maintenance. This can lessen the financial burden upon you.
- Bondable Lease – This is one step beyond a triple net lease. In this type of lease, the tenant is solely responsible for paying for all the damages that have occurred in his presence. Be it property damage or any type of accidental loss, he has to repair the damage even if the insurance scheme does not payout.
- Better Maintenance – Sometimes when the commercial property is of not much use for the owner, he does not think about the maintenance and wait until he leases it to someone else. So, when you are renting your property considering triple net lease, your place will be maintained better. This is because tenant knows that he has to incur all the damages if any happens so, he takes care of the maintenance part with utmost care.
- Insurance – Another advantage is that the tenant is the one who will pay for property insurance. This is an ideal situation when the tenant is not experiencing financial difficulties and there is adequate insurance on the property itself.
- Property Taxes – If there is any increase in the property tax that will directly be passed to the tenant so, as an owner, you have nothing much to worry about.