With a triple net lease, the renter agrees to pay not only the monthly rent but his share of property insurance, property taxes, maintenance and common area expenses in addition. This type of lease is typically used in the rental of commercial space. The building owner calculates the triple net cost per square foot, and the renter pays his portion based upon the number of square feet he is renting.
Add the property’s real estate tax and the insurance bill. Divide by the number of square feet of rental space in the building.
Examine the previous year's maintenance costs. Decide if they are reflective of the costs you will have in the next year. If not, make adjustments to the best of your ability. For instance, if gas prices have risen, you can expect the cost of snowplowing to go up. Divide maintenance costs by the number of square feet of rental space in the building.
Add the costs for maintaining common area such as hallways, restrooms and lobby. This might include carpet cleaning, bathroom supplies and utilities. Divide by the number of square feet of rental space in the building.
Add the annual costs, per square foot of rental space, for taxes, insurance, building maintenance and common area maintenance. Divide by 12 for the monthly cost of expenses.
Add the monthly charge for rental per square foot and the monthly cost of expenses per square foot to arrive at the triple net lease charge per square foot. Multiply by the amount of square feet being rented to arrive at that renter’s monthly triple net lease.
Items you will need
- Real estate tax bill
- Insurance bill
- Previous year’s building maintenance expenses, such as snow removal
- Previous year’s utility bill and maintenance expenses for common area
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