Buying Lubbock Commercial Real Estate

A triple net lease (NNN) is an agreement between the landlord and the tenant in which the tenant is financially responsible for property taxes, property insurance and maintenance. The tenant pays their proportionate share of these expenses on a monthly basis. NNN leases are typically seen on retail, single tenant office, and industrial properties. The Landlord is responsible for reconciling the expenses on a annual basis. This is the most advantageous type of lease for an investor.

A modified gross lease is also known as a base year lease. This is an agreement between the landlord and the tenant where the Landlord is responsible for the “base year” or the first year of the taxes, insurance and maintenance for the property. If there are any increases in property taxes, property insurance or maintenance, the Tenant is responsible for their proportionate share of the increase. The landlord is responsible for reconciling the expenses annually and notifying the tenant of the increases.

A full service lease is an agreement between the Landlord and the tenant where the landlord is responsible for the majority of the expenses for the property. The tenant pays one amount to the Landlord and the rent typically includes the property taxes, property insurance, maintenance, utilities and janitorial expenses. The leases are typically seen at multi-tenant office buildings and smaller spaces. This type of lease requires the most management on the landlord.