All You Need To Know About Lease Calculation

The lease is the most important document of the entire leasing process. Commercial and retail leases are calculated based on various types of leases and methods of calculation. The method used to calculate the lease is based on type of lease settled on in the tenant and landlord agreement for the commercial property for lease.

There are many automated commercial property lease calculators available on the internet and otherwise. There are also real estate management firms that will provide you with the required assistance in documentation and even lease calculations. But there are a few basics that every investor much know about lease calculation:

1. Lease typesThere are more than one type of lease. Some work in favour of the tenant, others in favour of the landlord and some create a balance between the two and try optimizing investment gains for both parties. The most commonly used types of leases are gross lease, net lease, single net lease, double net lease, and others.
2. Monthly and yearly ratesThe rates are generally calculated on a monthly basis. Depending on the contract of agreement between the two parties—the landlord and the tenant, the lease is calculated. The lease can also be calculated on a yearly basis depending on the term of payment. If the duration has a constant lease calculation then the yearly lease can be calculated but if the lease is depreciating or increasing after a certain period of time then monthly calculation is more advisable.
3. Common terms to be acquainted withThere are a few terms to be acquainted with before you actually figure out how to calculate the lease.

Usable Square FeetUsable square feet means the part of the area that you are actually leasing. This does not include the additional spaces like the lobby, corridor, hallways or common space shared with the other lessees.

Rentable Square FeetThe rentable square feet is the usable square feet plus a proportion of the commonly used areas. All leases for commercial properties are calculated on the basis of rentable square feet.

I am John Daniel, A US based Real Estate Professional and Blogger. With experience in real estate of more than 10 years, the above mentioned article is solely based on my experiences with madison management .