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Discover The Truth About Commercial Real Estate Leases
Here’s the cold hard facts about Commercial Real Estate Leases and what every investor must know!
Commercial properties can be leased with several types of lease agreements. The tenant, or possibly the owner could be responsible for all repairs and insurance premiums. It all depends on how the lease is negotiated… we’ll get into “Negotiations” a little later next week so make sure you check back with me.
OK here’s the meat… there are three different types of leases that are most common:
Full-Service Lease - this is where the owner is responsible for all of the operating expenses.
Net Lease - is a lease when a tenant pays some of operating expenses, most commonly the two major expense items being taxes, and insurance.
Triple Net Lease - is a lease when the tenant is responsible for “All” of the operating expenses. This includes the three major expense items taxes, insurance, and utilities. Also referred to as a Triple Net Lease or commonly referred to as a Net – Net – Net. It is best to negotiate and set up a triple net lease where the tenant pays all of the operating expenses each and every month separately, and just sends you a BIG FAT Check. If this is not negotiated properly, then often times the tenant pays for most but not all operating expenses.
You may be wondering about property types… so here it is:
Multi-tenant office and retail buildings are usually leased on a triple net basis. This is where the tenant will cover the real estate taxes, the insurance, and the common area utilities. When it comes to the common area maintenance (CAM) this is done on a pro-rata basis split between any of the tenant’s.
Net rentable square footage means the space they occupy not the gross square footage that would include hallways, stairwells, elevator shafts, lobbies, and common meeting area.
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Tags: commercial real estate, joint venture facilitation, Master Lease Option, terry hale, Terry Hale Commercial Real Estate, Terry Hale Real Estate





