What does a net lease typically require from a tenant?

A net lease typically requires a tenant to pay not only rent but also all operating expenses associated with the property. This may include property taxes, insurance, and maintenance costs. The structure of a net lease shifts many of the financial responsibilities typically borne by the landlord onto the tenant, making it a common arrangement for commercial real estate.

In a net lease, the tenant is often responsible for base rent, and additionally, they must cover these specific operating expenses, which can vary or be detailed in the lease agreement. This arrangement can provide benefits to landlords by ensuring they have a steady income while transferring various costs to the tenant.

Understanding this structure is crucial for both landlords and tenants, as it affects the total cost of occupancy for tenants and impacts the financial analysis for landlords regarding their investment properties.