Types of Long-Term Leases

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Niets Property Management
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Types of Long-Term Leases
This is a lease that you sign when you are
renting for a period of time that is for ten
years or more. Most of these leases are an
option for commercial real estate like factories,
office buildings, shopping centers, store
rentals, but not for apartment rentals. There
are also different categories of long-term
leases. One thing to note with these types of
leases is that the terms usually are in favor of
the property owner and not the tenant.
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Types of Long-Term Leases
When looking at this type of lease it is helpful
to know lease-related terms so you will
understand what type of lease you are signing.
One example is True or purethis a very
short-term lease and once it has expired you
cannot purchase the property or renew the lease.
This is type is mainly used for a piece of
equipment and not the actual property.
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Types of Long-Term Leases
There are also categories of long-term leases
based on the percentage of the propertys life
for the length they are released. Capitalthis
is a type of rent-to-own lease and spans the
majority of the expected life of the
property. Operatingthis is for only a
fraction of the life of the property and is
generally used for residential rentals because
the rental terms are usually six to twelve months
in length.
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Types of Long-Term Leases
Other categories place different levels of
responsibilities on the tenant and property
owner. Grossit requires the property owner to
take care of any taxes, insurance, and
maintenance. Double netthis requires the
tenant to pay all taxes and insurance but the
landlord is responsible for the
maintenance Triple netthe tenant is
responsible for insurance, taxes, and
maintenance. Close-end or netthe tenant is
responsible for almost every expense that is
associated with the rental property.
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Types of Long-Term Leases
Another type of long-term lease is called the
sandwich lease, which is when the tenant leases
the rental property to someone else. The tenant
becomes a middle man, being both the tenant and
the renter. This type of lease is also known as
sub-letting.
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Types of Long-Term Leases
In addition to categories of long-term leases
there are provisions that take into account the
falls and rises in the real estate
market. Step-downthis provision allows for a
decrease in rent if the market falls Step-upth
is provision allows for the rent to increase if
the market goes up
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Types of Long-Term Leases
Commercial Leasing
Both of these provisions may be added to the
lease to help ensure that the amount of rent is
fair for both parties. Before signing a
long-term lease make sure that you read the
contract thoroughly along with having an expert
read it. It should also include what will happen
if you need to break the lease early.
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Niets Property Management
5600 W.Brown Deer Rd., Suite 107 Brown Deer, WI
53223 Tel [phone] Cell
414-731-4502 www.nietspm.com