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Sep 30, 2018 // By:admin // No Comment

Net Leases and Investments.

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. The costs could be taxes, utilities, property management fees, trash collection and in other cases janitorial services.

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 it would do well for a potential investor to understand them before venturing into a new market. 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. With a double net lease the tenant is supposed to pay the rent, insurance premiums and the taxes on the property as well.

NNN or the net-net-net lease is the third type of net lease and with this one you are required to pay the rent and cover all the expenses that come with the property , this favors the landlord. 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. As much as the tenant is paying taxes alone some landlords prefer to having the payment go through them as that way they get to know that the payments have been done on time and that they are up to date.

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. Negotiating the leases is a wise move because you will be liable for the rent and the extra expenses regardless of whether your business is suffering losses or doing well.

The an investor needs to check the rent and ensure that before the percentage of the usual cost rent should be less than it would be if the owner was looking at a standard lease agreement and discover more. 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.

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