1. Gross Lease (Full-Service Lease)
   • • Definition: The landlord covers most or all operating expenses, such as property taxes, insurance, and maintenance.
     • Key Features:
       • Tenants pay a fixed rent amount.
       • Common in office buildings or multi-tenant commercial spaces.
     • Pros: Simplicity for the tenant; predictable costs.
     • Cons: Landlord bears the risk of fluctuating expenses.
2. Net Lease
   Net leases shift more financial responsibility to the tenant. There are three main types:
   • Single Net Lease (N Lease):
     • Tenant pays rent + property taxes.
     • Landlord covers insurance and maintenance.
   • Double Net Lease (NN Lease):
     • Tenant pays rent + property taxes + insurance.
     • Landlord covers maintenance costs.
   • Triple Net Lease (NNN Lease):
     • Tenant pays rent + property taxes + insurance + maintenance.
     • Common for retail or standalone commercial properties.
     • Pros: Reduces landlord’s financial burden; predictable revenue.
     • Cons: Higher costs and risk for the tenant.
3. Modified Gross Lease
   • Definition: A hybrid between gross and net leases. Tenant and landlord split certain expenses, often negotiated case by case.
   • Key Features:
     • Tenants typically pay rent and utilities.
     • Landlord covers taxes, insurance, and structural maintenance.
   • Pros: Flexibility for both parties.
   • Cons: Requires clear agreement to avoid disputes.
4. Percentage Lease
   • Definition: Tenant pays a base rent plus a percentage of their gross sales.
   • Key Features:
     • Common in retail spaces, particularly malls.
     • Percentage rate often applies after a sales threshold.
   • Pros: Aligns landlord’s revenue with tenant’s success.
   • Cons: Variable income for the landlord.
5. Ground Lease
   • Definition: Tenant leases the land and builds their own improvements, which revert to the landlord at the lease’s end.
   • Key Features:
     • Long-term (often 50-99 years).
     • Common for commercial developments.
   • Pros: Provides steady, passive income; retains ownership of land.
   • Cons: Limited use during the lease term.
6. Short-Term or Month-to-Month Lease
   • Definition: Flexible agreements that renew monthly.
   • Key Features:
     • More common for residential or small commercial spaces.
     • Easy to end or adjust terms.
   • Pros: Flexibility.
   • Cons: Less stable income for the landlord.

Choosing the Right Structure

• Consider the property type: Residential, retail, office, industrial, or land?
• Factor in responsibility levels: How much risk or expense are you willing to manage?
• Assess market norms: Certain lease types are more common in specific industries or areas.

Regardless of the profile of the property and your desired financial goals, we always recommend seeking advice from a Reliant Partners advisor to determine an opinion of value and the potential market demand for the subject property. We also highly recommend utilizing a real estate attorney to draft any agreements.