Finding the right property to lease for your business is not just about being in the right place at the right time. You also need an understanding of the pricing structure that commercial landlords use.
They have several formats to choose from which can make it incredibly difficult to compare one set of premises with another. It’s similar to the way that supermarkets use different pricing methods to make you think something is a better deal than it is.
A landlord can use up to three nets
Single, double and triple net may sound similar, but confusing one with the other could cost you thousands.
- Single net: You pay property tax and rent. The landlord takes care of the rest.
- Double net: You pay property tax, insurance premiums and rent, while the landlord covers the rest of the bills.
- Triple net: You still pay property tax, insurance premiums and rent. But you also pay for structural maintenance and repairs on top.
Can’t I just ask for an all-in price?
You can ask for what is known as a gross lease which makes it much easier to budget ahead, as you know you just have to come up with a fixed amount each month. The disadvantage is that the landlord may inflate the price to cover their back in case costs rise.
Beware of commission clauses
Now you understand the basics, you also need to know that some landlords could ask for even more money, even if you have a gross lease. Check whether they are expecting you to pay a percentage of your sales on top – it’s common if you rent in a shopping mall, for example.
As with any business contract, it’s far easier to ask questions and request changes before you sign than after. Getting help to do that now can save you a host of worries later.