If you’ve entered into a commercial lease before, you’ve probably heard terms like Single Net, Double Net, Triple Net or Gross Lease. But many property owners and renters don’t fully understand what these terms mean.
While any lease should be looked over by a lawyer before you sign it, here’s a basic primer on these different kinds of leases and whom they benefit.
First of all, there are some basic expenses involved in the maintenance of any commercial property, including:
- Property taxes
- Utilities
- CAM (Common Area Maintenance)
- Insurance
(CAM usually includes things like the roof, foundation and the exterior of the building, as well as the parking lot and other common areas.)
The various types of leases basically relate to which expenses are going to be paid by the renter and which are going to be paid by the property owner. Here’s a basic breakdown of how it works for each type of lease:
Single Net Lease
Tenant pays:
• Base rent
• Property taxes
• Tenant’s utilities
Property Owner Pays:
• CAM (Common Area Maintenance)
• Insurance
Double Net Lease
Tenant Pays:
• Base rent
• Property taxes
• Insurance
• Tenant’s utilities
Property owner Pays:
• CAM (Common Area Maintenance)
Triple Net Lease
Tenant Pays:
• Base rent
• Property taxes
• Insurance
• Tenant’s utilities
• CAM (Common Area Maintenance)
Property owner Pays:
• Nothing
Gross Lease
Tenant Pays:
• Rent
• Tenant’s utilities
• Interior maintenance
• Interior insurance
Property Owner Pays:
• CAM (Common Area Maintenance)
• Property taxes
• Insurance
The Triple Net Lease is most advantageous to the property owner, but also tends to offer the lowest rent. The Gross Lease is most advantageous to the renter, but often carries the highest rent.
Regardless of what type of property investment you’re making, whether you’re looking to sell a property, buy a property, rent a property out, or lease a property for your business, contact us at TripleNetInvesting.com today. As the commercial division of Asking Price Realty, we’re part of the largest real estate network in New York, and we have agents standing by to help you achieve all of your real estate investment goals.
