How to Calculate Triple Net Lease

A triple net lease is a commercial lease for which the lessee essentially takes on all of the total cost of the property in addition to a monthly rental payment. The lessee is directly responsible for paying property taxes, property insurance and all maintenance required during the rental. If you are handy with fixes or possess a network of fairly priced contractors, a triple net lease may benefit your company’s bottom line since the monthly lease amount is less than a conventional rental, offsetting the extra costs you pay directly.

Get the negotiated monthly lease amount from your own commercial property rental.

Get a insurance quote which has at least the minimal requirements for property insurance coverage outlined in the rental agreement. The insurance provider usually presents the quote in an annual amount. Split the borrowed sum by 12 to find the estimated monthly price.

Estimate the current-year property taxation obligation. Unless your neighborhood has undergone a significant recent shift in real estate values, you may use the previous year’s tax invoice to estimate land tax costs. Split the estimated property tax price from 12 to get the monthly amount.

Ask the property owner to provide you with a record of maintenance costs for the previous two decades so that you are able to estimate the prices going forward. Don’t forget to adjust the price for capital improvements that you will not have to substitute for years, such as even fencing or roofs. Decide on a reasonable monthly sum for property maintenance based on your ability to make your own repairs or the pricing from your stable of contractors.

Add the monthly lease, property insurance, property taxation and maintenance estimates to obtain an estimated monthly cost for the rental.

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