Team Bussiere, Oceanside Real Estate Expert

Hello@TeamBussiere.com

LANGUAGES

Your One Stop for REAL ESTATE.

We live, work here, and we are here for you!

call now

(760) 237-8616

RENT DEFINED

RENT is the cost for the tenants' use of the land or building. It is a general term used to define how much a tenant pays to occupy a space. Rent can be defined in many ways:

Rent is usually quoted as a price per square foot. That is a dollar amount per square foot of rentable (leasable) space. This amount is sometimes quoted at a monthly rate, and sometimes at an annual rate. For example, $1.00 per square per month is the same as $12 per square foot annually. This quote is usually the "Base Rent".

In addition to this "Base Rent", there may be add-ons. These add-ons are called "additional rent" and can be composed of many things. When these additional rent items are added to the base rent, the final product is "RENT".

Before getting into a discussion of these "additional rent" items, there is one other important consideration to base rent. Often, when base rent is quoted it, may be quoted as "effective rent" and not actual rent. Effective rent is a method to make the rent sound less when the actual rent being paid is much more. Effective rent is calculated by taking "free rent" into consideration. For example, if a tenant wants to rent 1000 sq. ft. and pay $1.00 per square foot, then the base rent would be $1,000 per month. If the landlord gives 2 months of rent-free as an incentive to rent the space, then the tenant only pays for 10 months in the first year. Therefore, 10 x $1,000rent/month = $10,000 rent paid in the first year. Thus, effective rent is the $10,000 in rent divided by 12 months divided by 1,000 sq ft. = $0.83 per square foot per month.

Actual rent is the cost per square foot without free rent and is the amount included on the base rent line in a lease.

Most leases may have a clause called “Additional Rent”. It may go by other names, but it still means the same. This additional rent is in addition to the “Base Rent” or “Guaranteed Minimum Monthly Rent”.
The clause may start something like this: “In addition to the Base Rent herein agreed to be paid by Tenant, Tenant shall pay to Landlord Additional Rental as follows.....:”
Then there may be a list of other expenses the tenant will be responsible for. Some of these expenses are typical:

Real estate taxes, rental taxes, and business taxes, including a (%) administrative fee
Building repair and maintenance expenses, including a (%) administrative fee
Fire insurance and extended coverage costs, including a (%) administrative fee
Utilities, including a (%) administrative fee
There may also be a marketing fee, and other costs or fees included in this Additional Rent.
Additionally, there may be a reference to Common Area Expenses which are all those areas shared in common by all the tenants. These could include parking lots, landscaped areas, trash areas, etc.

The above costs and expenses are paid on a pro-rata share (percentage) or “Tenant’s share”. This percentage is calculated as the ratio of the size of the Tenant’s Premises as it compares or relates to the size of the entire building(s) on the property.

For example, if a Tenant has a store of 1,500 sq. ft. in a 6,000 sq. ft. building, the Tenant’s pro rata share would be 1,500/6,000 = .25 or 25%.

Other types of Additional Rent may be:

Percentage Rent.
Expenses over and above a Base Year expense amount
Expenses exceeding an Expense Stop amount.

Testimonials

I was very fortunate to have found Sara to represent me as the listing agent of my house. Sara is incredibly knowledgeable, dedica...

- M. Kimm

View All Testimonials

Popular Pages

Location

3825 Mission Ave. Suite D3
Oceanside, CA 92058

(760) 237-8616

DRE# 00353750 | 01498539

Real Estate Websites by Strategic Agent Inc.