What is a lease?
A lease is a long term contract (usually anywhere from 6 months to a year) where a tenant is allowed occupy a property for a specified amount of time. There are different types of leases that specify what the tenant will pay for.
Gross Lease (aka, full service leases, straight leases, and flat leases)
There are a lot of names for this type of lease but they all mean the same thing. A gross lease means that as a resident, you would pay a fixed monthly charge. You would pay the same amount every month for however long your lease is. Your landlord would cover the rest of the expenses such as utilities, taxes, insurance and whatever else that would need to be covered.
Net Lease
This is where the resident or tenant would pay a base rent amount plus all of the operating expenses OR a portion of them. The operating expenses are utilities, taxes, insurance, etc. Everything that the landlord is paying for in the gross lease. Make sure to keep track of and know what extra payments you would be taking on separate from your base rent. There are different types of net leases such as a single net lease, a double net lease, and a triple net lease. Each type of lease breaks down who pays for what.
Percentage Lease
This lease is usually for business purposes. As a tenant, you would pay the base rent plus give a percentage of your business to the landlord. The percentage amount given to the landlord is negotiated between the tenant and the landlord.
Variable Lease
A variable lease is when the lease changes according to the contract. The amount of money you will pay will be predicted and increase in increments. It usually changes based on the consumer price index which is the measurement in changes of how much the average household spends. The CPI also measures inflation and the amount you could be paying on your lease.
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