If you own a property and rented it out, you must be looking for a perfect landlord tenant-relationship. Isn’t it? But why this kind of relationship is important. First it makes easier for you to manage everything. As an investor, you never want to keep your property vacant so that you don’t need to compromise with your profits from your commercial property. Therefore, for any commercial property it is very important to pick the right lease. In case, you pick the wrong one, you will end up in a complete mess. Hence, before signing the lease, you should consider if it is going in your favor or not; do you get guaranteed rental amount from it or not. A real estate lease should be beneficial for both tenants as well as the owner.
Tenants will compare rent and the commercial property before signing the lease because no wants to pay extra money it’s not worth it. There are different lease options available that depend on the location and space of the commercial property. Incase, you property is located in the upper class commercial area; the structure of its lease would be totally different than a commercial property which is located in some middle class area. If you don’t carry a good knowledge about real estate, you should get in touch with some property management firm. For example, if you want to rent out a commercial property in Michigan, you should search for some Michigan property management firms so that you can get the best results. Since you want to lease out your property, you should know about the terms that will be there in the lease.
Standard lease form agreement is one of the most common types of leases. Standard lease is prepared by every landlord who wants to lease up his/her property. Terms and conditions will differ from one property to the other and from landlord to landlord however, you’d always find a similar structure.
Request for Proposal (RFP) is always sent by an agent to the landlord in order to get a copy of the standard lease form agreement. If you go through a RFP, you’d find numerous vital issues that will be differ from one owner to the owner. But one thing that will remain there in the proposal is section that will highlight the tenant’s expectations.
Base Rent is the basic cost that you’d need to pay in order to use the commercial property. However, it would not include any taxes, insurance or maintenance charges such as CAM (Common Area Maintenance).
Triple Net includes CAM, insurance and maintenance which will be divided between the tenants that are there in the commercial real estate. If you add up Base rent to the triple Net, it is known as Gross Rent.
Consumer Price Index or CPI is used by the government to determine the value of the lease that has been increased on yearly basis. These were few terms that would be there in almost every lease.