Readers ask: What Is A Common Management Fee To Assume A Large Multi-family Building?


How much cash will an investor have to pay on a property where the Bank is providing a loan at 75% LTV on a purchase price of 4750000 with 350000 in closing cost?

Mortgage at 75 % LTV equals 0.75*$5,550,000 = $4,162,500. Therefore, The investor will pay the balance on the purchase price and the closing balance.

What is the most common index used to determine rent increases in a lease escalation clause?

The CPI (Consumer Price Index ) can also be used to determine the rate of rent escalation. Every month the Bureau of Labor Statistics of the U.S. Department of Commerce publishes the CPI, which indicates changes in the cost of living.

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Does NNN include management fee?

The NNN charge will typically cover things like property maintenance, landscaping, site improvements, security, taxes, common utilities, insurance payments and repairs. The base rent is increased by the NNN charge so that the landlord is able to recover the expenses for taxes, maintenance and insurance.

What determines the difference between the various types of net leases?

A single net lease requires the tenant to pay only the property taxes in addition to rent. With a double net lease, the tenant pays rent plus the property taxes as well as insurance premiums. A triple net lease, also known as a net – net – net lease, requires the tenant to pay rent plus all three additional expenses.

What does 7.5% cap rate mean?

The cap rate (or capitalization rate ) is a term used by real estate investors to measure the expected rate of return on an investment property for sale. It’s the most commonly used metric by which real estate investments are evaluated.

What does 60% LTV mean?

As the name suggests, LTV is the maximum amount that the lender will consider loaning to you as a percentage of the value of the property. For example, a mortgage with a maximum Loan to Value Ratio of 60 % would probably be offered with a lower interest rate.

What is the difference between rent escalation and percentage rent?

Percentage Escalation Clauses are similar to percentage rent clauses in that they too operate from a FIXED BASE RATE. However, instead of tying rent increases to an increase in gross sales, increases are based on the owner’s anticipated increase in operating expenses for the commercial real estate investment property.

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What is the most common lease for retail property?

Most Common Retail Leases for Commercial Properties

  • Single net lease. A single net lease, or net lease, is an arrangement where the tenant pay for utilities and property taxes.
  • Double net or NN lease. A double net or NN lease is similar.
  • Triple net or NNN lease.
  • Full-service gross or modified lease.

What’s an expense stop as used in leases?

An expense stop is a standard part of many leases for office and commercial space, and at its simplest, is pretty easy to understand. Also sometimes referred to as “additional rent,” an expense stop simply is the maximum amount that a property manager or landlord has agreed to pay for expenses.

What are the three types of leases?

The three most common types of leases are gross leases, net leases, and modified gross leases.

Are management fees reimbursed under triple net leases?

Under a typical ” triple – net ” lease, the tenant pays all expenses, including property taxes and insurance, maintenance, and utilities for its space, leaving the owner with no expense associated with the property. The owner sued the tenant, alleging that it breached the lease by failing to pay the management fee.

Who pays for structural repairs in a triple net lease?

In a triple net lease property, the tenant agrees to pay for all the expenses involved in operating the property. These expenses include fixed and variable expenses, as well as common area maintenance costs (CAM). Generally, the owner is responsible only for structural repairs.

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What are the types of leases?

Types of Leases:

  • Financial Lease:
  • Operating Lease:
  • Sale and Lease Back Leasing:
  • Sales Aid Lease:
  • Specialized Service Lease:
  • Small Ticket and Big Ticket Leases:
  • Cross Border Lease:

What is an example of a gross lease?

A gross lease is a lease that includes any incidental charges incurred by a tenant. Gross leases are commonly used for commercial properties, such as office buildings and retail spaces. Modified leases and fully service leases are the two types of gross leases.

Why would you want a triple net lease?

The most obvious benefit of using a triple net lease for a tenant is a lower price point for the base lease. Since the tenant is absorbing at least some of the taxes, insurance, and maintenance expenses, a triple net lease features a lower monthly rent than a gross lease agreement.

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