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Percentage rent, or a percentage lease, is a type of lease seen in commercial real estate. It is a rental charge based on the gross income of the tenant rather than a fixed monthly or annual value. In most examples, the percent rent only applies after a certain amount of base rent has been paid.
A gross lease allows the tenant to pay a fixed fee in exchange for exclusive use of the property. [3] [4] [5] Landlords typically calculate a rent amount that reasonably covers the cost of rent, standard utilities, and other expected and day-to-day expenses. [6] In a gross lease, the rent is primarily paid by the tenant.
“According to the U.S. census, the median gross rent for a housing unit in the United States is $1,097 a month, but depending on how many bedrooms are located in that unit, the figure could ...
The term "net lease" is distinguished from the term "gross lease". In a net lease, the property owner receives the rent "net" after the expenses that are to be passed through to tenants are paid. In a gross lease, the tenant pays a gross amount of rent, which the landlord can use to pay expenses or in any other way as the landlord sees fit.
The median rent in Elizabeth was $1,391 per month, compared to $2,896 homeownership payments. This is a $1,505 difference, or 2.1 times as high as monthly homeownership costs versus rent payments.
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In a "net lease", in addition to base rent, the tenant or lessee is responsible for paying some or all of the recoverable expenses related to real-estate ownership. As the rent collected under a net lease is "net" after expenses are passed through to tenants to be paid, the rent tends to be lower than rent charged under a "gross lease".
If the lessor gives the lessee a cash allowance for improvements, this is treated as a reduction of rent and amortized over the lease term. Lease Bonus: Prepayment for future expenses. Classified as an asset; amortized using the straight-line method over the life of the lease. Rent Kicker, or Percentage Rent: Common in retail store leases.