3 Things You Don’t Know About Rent

Everyone knows that rent is the amount a tenant pays to a landlord for the use of a property or space.  What you probably don’t know is that landlords and real estate agents have all sorts of other tack-on terms to define what is included in those monthly payments and what isn’t. 

Knowing what these terms mean can save you a lot of money.  Did you know that sometimes your rent doesn’t include real estate taxes?  Do you know what CAM stands for?  What about the letters NNN?  Below, I’ll describe these things and more.

Along with rent, tenants may be responsible to pay for property services such as Real Estate Taxes, Common Area Maintenance (CAM), Insurance,  and of course Utilities.  To break things down a bit more, CAM can cover landscaping, snowplowing, building maintenance, parking lot lighting, and common area cleaning.  Make sure to check what is included because all landlords have their own way of doing things.

Starting with the most inclusive type of rent for a tenant to pay, below is list and brief descriptions of some terms you’ll see on our website and other popular listing sites:

All/Some Utilities Included

• Full Service Gross – Everything is included in the rent payment: RE Taxes, CAM, Insurance, and Utilities.  
• Plus Electric – Same as above except the tenant pays for Electric while other Utilities like water, sewer, gas and/or oil, are included.

Utilities Not Included

• Gross – RE Taxes, CAM, and Insurance are included, the tenant pays own Utilities.
• Plus Utilities – Same as above
• Modified Gross – This can be debated more than the rest.  Typically means that the tenant is responsible for their proportional share of one or more of the expenses.  For example, the cost of snow plowing varies greatly from year to year so the landlord charges for it separately.  This type of rent is related to Base Year Gross, explained next.
• Base Year Gross – Establishes the first year of the lease as a “Base Year” and includes the costs of RE Taxes, CAM, and Insurance in that year, but in subsequent years, the tenant will be responsible for any increases in those costs over the established base year.
• Net Lease – The rent includes one of RE Taxes, CAM, or Insurance, while the tenant is responsible for the others.
• NN or Double Net – includes two of RE Taxes, CAM, or Insurance, while the tenant is responsible for the other.
• NNN or Triple Net – tenant responsible for all expenses associated with their proportional share of the building. 
• Absolute NNN – tenant responsible for all expenses including the building itself.  Only used in single tenant buildings.
• Absolute NNN Ground Lease – sometimes referred to simply as a Ground Lease, this type of lease describes when the property owner leases the ground to a tenant to build their own building for which they are responsible for all construction costs and ongoing expenses like RE Taxes, CAM, Insurance Utilities.

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Next week we’ll talk about how rent per square foot is calculated for leasing.