Commercial Expenses

[BJPastor]

Hello all,

On a triple net lease, what would remain for the owner for expenses? I`m assuming triple net means rent/taxes/insurance/maint/repairs are paid by the tenant. Wouldn`t the owner still need funding for accounting? Legal? Book keeping? Any idea what a yearly expense would be for all "other" expenses on a property that has a $5000/mon lease income? Any comments would be appreciated.

Thanks,

 

[Thomas Beyer]

QUOTE (EdmInvestor @ Oct 13 2009, 08:47 AM) Hello all,

On a triple net lease, what would remain for the owner for expenses? I`m assuming triple net means rent/taxes/insurance/maint/repairs are paid by the tenant. Wouldn`t the owner still need funding for accounting? Legal? Book keeping? Any idea what a yearly expense would be for all "other" expenses on a property that has a $5000/mon lease income? Any comments would be appreciated.

Thanks,
triple net means tenant pays:
a) real estate taxes
b) condo fees, which usually includes property book keeping and usually any R&M as per lease
c) utilities, incl a share of common area utilities if multi-tenant building (i.e. usually part of condo fees)

Any major R&M like a new roof may come out of condo fees .. or not .. but that is dependent on the wording of the lease and/or condo doc .. depending if this is a single or multi-tenant building !

Landlord usually pays for his own corporate accounting .. and for any vacancies .. and for mortgage .. and for TI (tenant improvement) for new tenant.

IT DEPENDS ON THE LEASE .. which may stretch for 50 pages ! Thus it is CRITICAL to have that lease well understood and reviewed by a lawyer or better 2. Many pitfalls .. many legal loopholes that tenant or landlord may use to not pay !

 

[brentdavies]

Don`t confuse the terms gross lease vs triple net. (Net, net, net) for commerical leases. The terms change from region to region. CAM is common area maintenance, used in the east. Triple Net is used in the west.

Not used in residential leases.

Gross lease, includes most items such as insurance, taxes and maintenance.

Triple net is the amount the owner receives for debt serve, and profit. Most other expenses are paid by the tenant.

 

[BJPastor]

Thanks for your help! As always, this forum is such a great place to acquire information.

Thanks again,
B.J.