There are several different types of leasing structures in commercial real estate. Whether you are leasing a Lafayette, IN property or are looking to lease out a property, understanding the different types of leases will help you protect your investment. One of the most common types of lease arrangements is the single net lease. Single net leases have both pros and cons depending on your unique circumstances.
What Is A “Net” Lease?
A net lease is a type of rental agreement where a tenant agrees to pay some of the other associated costs with the building. These costs can include maintenance, insurance, and taxes. There are several net lease structures including:
- Single net leases
- Double net leases
- Triple net leases
Net leases are the opposite of a “gross” lease where the landlord covers all expenses and the tenant pays a fixed monthly charge.
What Is A Single Net Lease?
A single net lease is a leasing arrangement where the tenants agree to pay for one expensive beyond the cost of leasing the property. In most cases, the single expense is taxes, but they can be structured in other ways as well, though this is rare. Typically, with a single net lease, the tenant will pay property taxes but the owner will pay for all the other operating expenses associated with the property like maintenance and insurance.
Why Would A Landlord Choose A Single Net Lease?
There are many considerations behind choosing a lease structure as a landlord. The first is how much property management do you want to do? If you live out of state but have a property in Lafayette, IN it may be more beneficial to have a triple net lease where the tenant covers taxes, maintenance, and insurance. However, single net leases are far more attractive to tenants. So if your goal is to fill your properties to capacity, you may want to offer a single net lease to entice tenants. In this case, if you do live in a state other than Lafayette, IN you can always contract out your building management responsibilities.
Why Would A Tenant Choose A Single Net Lease?
As with landlords, the choice depends entirely on your unique circumstances. The biggest benefit of choosing a single net lease is it will cost you less every month in rent. However, you need to assess the costs of insurance and maintenance as a factor to truly calculate the cost savings. An upside though is you will have more freedom to negotiate property taxes and will have control over the costs of insurance and the maintenance schedule.
Deciding which leasing structure is right for your needs can be tricky. Contact the commercial real estate team at Titan Lafayette Real Estate can help. We offer a range of commercial property services to both landlords and tenants. We can help you review your options, help you decide what model works best for your needs, and answer any questions along the way. Give us a call today to learn more.