GROSS LEASE In this type of lease the tenant pays the landlord a gross amount for rent, plus sales tax where applicable. The landlord then pays the property’s operating expenses such as property taxes, insurance, and management or maintenance costs from the income he receives.

The Tenant may be responsible for electric, telephone, and possibly water & sewer charges depending on the verbiage of the lease document. This type of lease is more common for office users or in older buildings where utilities may not be separately metered.

With some gross leases, the landlord may put an expense stop provision in the lease. In this type of clause the tenant pays the excess over a specified ceiling on operating costs. NET LEASE  Most common with today’s commercial properties, the Net Lease directs the tenant to pay the landlord a “Base Rent” which is net of property expenses, PLUS an additional amount for tenant’s share of the property’s expenses such as property taxes, insurance, common area maintenance (C.A.M.), management, etc.

Before you commit to renting a property, make sure that you have a tenant broker representing your interests. Landlords also hire brokers called leasing agents to fill vacant space in their buildings, but these agents work for the landlord, not for you. They earn a commission from the landlord or building owner each time they get a tenant to sign a lease and occupy space.

Although a building owner also pays a tenant broker’s fee, tenant brokers don’t work as exclusive leasing agents for one property or one landlord. When you hire a tenant broker, he or she works for you. Beware of landlords or leasing agents who refuse to work with your broker: This is a pretty sure sign you’re dealing with disreputable people.

A tenant broker should give you objective advice, since their commission isn’t directly tied to a particular property. In addition, working with a broker lets a landlord know you’re seriously looking at multiple leasing opportunities. This may make a landlord more competitive and willing to negotiate favorable lease terms.

The best way to find a good tenant broker is to ask the right people. Get referrals from your peers or business associates, or just ask brokers about their experience. Look for a broker who has a history of helping clients find properties and experience negotiating lease terms, along with a proven track record of protecting tenants.

The need for a bigger office or storefront is a great problem to have: It means your company is growing. But upgrading to a bigger space presents a host of issues for small-business owners.  Think about your company’s potential growth before you start investigating new locations. Figure out how big an organization you want to manage. Then consider the resources it will take to get you there and the space that you’ll need. Include the following factors in your decision-making process:

Many small business owners struggle with the dilemma of deciding whether to buy, rent, or lease office space. If you ask business consultants or real estate brokers, you will get conflicting answers. The key point to remember is this: Each small business brings its own unique situations and concerns.

Property can be a great long-term investment, and the building and surrounding land is an asset that almost always appreciates in value. Fixed overhead costs. Along with payroll, a mortgage is one of the highest fixed business expenses.

A good place to begin is by examining your company’s current business plan and earnings forecast, the credit history, and the local real estate market. Every business idea needs to be carefully researched before making any final decisions.

As a new small business owner, you may be short on cash, so it will be less expensive to rent or lease a facility when you are just starting out. Many small businesses make the mistake of buying a building only to realize later that they do not like the location because of insufficient parking or a continuous decline in real estate property values. Be sure to think about such issues before signing on the dotted line.