As the economy struggles along many people have had to face foreclosures. These people are now turning to rentals as their only housing option.
There are many things that a renter should know before signing a contract about the lease they are considering. First of all, a property lease, or a closed end lease, is a contract where a lessee promises to pay all the expenses normally associated with ownership of the property without actually owning it.
These expenses can include utilities, repair, insurance, and taxes. However, the expenses a lessee is required to pay may differ according to the contract.
A net lease is like a property lease except that the tenant is expected to pay for some or all of the expenses associated with the property. These may include real estate taxes, insurance, maintenance, repairs, etc.
These expenses will be specified in the contract. In many cases the expenses will be split among the tenants on a basis of the size of the apartment rented by the tenant.
After rent is paid by the tenants, the owner will receive the money left over after the expenses are paid.
Often net leases are confused with a gross lease, where a tenant will pay a gross fee for rent and then the owner can use the money for whatever he would like or to pay off the expenses.
Another type of lease is a single net lease. In a single net lease the lessee is expected to pay for the property taxes in addition to rent.
The double net lease is where the tenant is responsible for the real estate taxes and building insurance, in addition to rent. The landlord will pay for renovation and maintenance.
In a triple net lease the tenant will pay for real estate taxes, building insurance, and maintenance in addition to rent. This kind of rental agreement is usually reserved for the renting of free standing buildings because the tenant is expected to pay for maintenance on common areas as well.
Triple net leases are generally considered equity investments instead of cash flow investments.
A bondable lease, or an absolute triple net lease, is extremely dependent on the lessee. In these types of contracts the tenants are required to pay for any kind of expense related to the property in addition to rent.
These expenses include rebuilding after a disaster no matter what insurance will contribute. Renters are also expected to pay rent after a partial or complete condemnation.
Bondable leases do not have an end and rent abatements are not allowed. Rent becomes net throughout all types of circumstances comparable to the restrictions associated with a bond.
The most important thing to consider when evaluating a rental possibility is your finances. Make sure that you have a savings account set aside that holds the value of several months of rent in case the unexpected happens.
If you were to lose your job, you will buy yourself enough time to find another one by setting this rent money aside. Decide whether or not you can afford the rent of the place you are looking at.
Take a tour of the buildings considering the style, appliances provided, and the atmosphere. Talk to the previous tenants or potential neighbors and find out what they think about management and maintenance.
The people who actually live in the rentals can give some very valuable information that management may not be willing to disclose. If you decide that this is where you would like to live, look over the contract very critically.
This is the most important step of the whole process. Signing your name to the bottom of the contract means that you will do everything that is defines.
It can be tempting to skip the fine print on long contracts sometimes. This is a very dangerous habit, and not one that you should allow on a housing contract or you may find yourself paying extras fees.
Jack Landry has worked since 1991 in property investments. He loves all things financial. He recommends (http://www.stanjohnsonco.com) for your property investment needs.
Distributed by http://www.ContentCrooner.com
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