If you have recently acquired a property with the intention of leasing it to commercial tenants, then it is crucial to think about how you will price things. If you look around at what other landlords are doing, you will notice that they don’t all price things the same way.
Most landlords use one or more ‘nets’ in their lease. Think of them as expenses the tenant will have to pay on top of the basic monthly rent that are not included in a typical lease. How many you choose could end up making a massive difference to your profits if prices for certain things rise or fall.
Single, double or triple net
Here is the basic difference between the various types of net lease.
- Single net: The tenant must pay property tax in addition to their basic rent
- Double net: The tenant must pay property tax and insurance premiums in addition to their basic rent
- Triple net: The tenant must pay property tax, insurance premiums and any maintenance or repair fees in addition to their basic rent
You could, of course, just charge a gross, all-inclusive rent. Some tenants might prefer that, as it gives them complete certainty over what they will be paying. If you opt for this, you’d need to charge them a higher figure to cover those extras and any possible changes to them during the time the contract lasts. Otherwise, if something such as energy prices rise, you could find yourself losing money.
Looking around at what other landlords are doing is a good starting point. You might choose to do the same as them or you might choose to format your offer differently, to attract those renters who don’t like the other contracts on offer. In all cases, getting legal guidance to draw up the contract is advisable.
