What are the different types of leases?
— There are several common types of leases: gross, net, percentage and ground. They differ in the manner in which rents are computed and paid.
- Gross Lease – The Tenant pays only a base rent.
- - Gross leases are common in residential and commercial leases.
- Net Lease – The Tenant pays the base rent plus some or all of the real estate taxes.
- Net-Net Lease – The Tenant pays the base rent plus some or all of the real estate taxes and property insurance.
- Net-Net-Net (NNN) Lease – The Tenant pays the base rent plus some or all of the real estate taxes, property insurance and agreed-upon repair and maintenance expenses.
- - Net Leases are common in commercial leases.
- Percentage Lease – The Tenant pays fixed amount plus a percentage of the Tenant’s gross income in excess of a predetermined minimum.
- - Percentage Leases are common in commercial leases, specifically retail use.
- Ground Lease - The Leasing of the Landlord’s land. Typically ground leases are long-term leases.
- - Ground Leases are common for farms, gas stations, fast food restaurants, etc.
What is the difference between buying, leasing and property management?
- Buying: The transfer of real property and rights (ie building, land) between buyer and seller in exchange for negotiated terms.
- Leasing: A Property owner and Tenant enter into a contract in which the Owners rights to occupy the real property (ie building) are transferred to the Tenant for some value, typically termed rent. This is a similar structure to if you would rent an apartment or house.
- Property Management: The property Owner has an Agreement with the Property Manager to maintain the day-to-day business of the property. This often includes collecting rent, paying invoices and handling repairs and maintenances.
How many square feet are in an Acre?
What’s a Cap Rate?
— It is an income approach evaluation formula to determine the value of a property and the rate of return.
How do I figure my Cap Rate?
- Annual Gross Income – Operating Expenses = CAP Rate
Property Purchase Price
What’s my Property Value?
— Agents and Appraisers use a few different ways to determine the value of a property based on various factors. The most common are Market Data approach, Cost approach, and Income approach
What are the difference between a “boundary survey” and a “stake survey”?
— There is no difference! A “stake survey” is commonly used to refer to the legal term of “boundary survey”
Then what is a “spot survey”?
— A “spot survey” is another name for a Surveyors Real Property Report (SRPR) or Mortgage Title Inspection. This is typically less expensive than a “boundary survey” and gives a general idea of a property location.
What does it mean if someone has an option or first right of refusal on a property?
— While they are very similar, they are quite different. An option means someone has the right to buy the property at a later date. This would require some sort of consideration for the property and require all essential elements of a contract. A first right of refusal is when someone has the first chance to buy or lease a property. They don’t have the right to buy or lease until it is offered for sale or lease by Seller. It must be in writing but doesn’t have a definitive sales price and of course, all contract laws apply.