Net Leases in Business.
Real estate industry in one country is not similar to another due the different policies enacted by the authority bodies. A net lease is a lease in real estate where the tenant covers the rent as well as all or some part of cost associated with maintenance, usage or operation of the property. Janitorial services, taxes, utilities and property management are some examples of the usual costs that are associated with neat leases apart from rent.
Taxes, insurance and maintenance are the three main categories that the net lease cost are put into apart from the rent. There are different kinds of leases and if you are looking to invest in a market that has active net leases, it would be wise to understand the different leases. Single a neat lease is the first category of net lease, where the tenet of the property will cover the rent and the taxes on the property and nothing more. The next category, double net lease, sees the tenant pay the insurance [premiums of the property in addition to the rent and the taxes on the property.
The third category or the triple net lease has the tenant paying the rent and all other costs that are associated with the property. Single net lease are not that common in the market because the tenet has very little risk on their shoulders as they cover only the taxes. In covering taxes in the single net leases a landlord might state their wish of the tax payments to go through them so that they can make sure that the tent meets the payments on time and that they pay them in full.
As an investor you need to be aware that the net leases almost always favor the landlord. Negotiating the net leases is possible and as the investor you just need to understand the process and the tips on how to go about it. The the main reason to consider negotiating the leases is because you will have to pay them regardless of your business doing well or suffering loses.
Ideally the rent before the percentage of the usual cost should be less than it would be if you were to in a standard lease agreement. This all points to one thing, research an investor will take a risk only when they are assured that the risk is worth taking, with the same intense research they need to understand the details in the lease . The most common alternative to net leases is a gross lease where payment is a flat agreed upon amount per month.