Initial Triple Net Lease Agreement Made Easy

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hey everyone Dave Pena of Revenue calm and I'm coming at you with another commercial real estate investing video tip in our commercial real estate investing video series great so today we are talking about triple net leases what is a triple net lease why do you care why would you want one what is it I don't understand triple net lease is almost always in commercial real estate not in residential real estate and remember when I talk about commercial real estate in this series I'm talking about retail office light industrial not apartment buildings okay so keep that in mind triple net leases do not work in a and an apartment building okay they only work in office retail and light industrial so what is a triple net lease a triple net lease is basically you have a lease in place with your tenant in a commercial building and they pay a base rental rent rate and that's usually per square foot so say 10 dollars per square foot of the area that you're they're using in that building but then they also pay a portion of the operating expenses and those operating expenses include taxes insurance for the building the property tax is on the building general repairs and maintenance on the building landscaping snow removal most of parts of Canada of course need that we don't generally need it out where we are thankfully property management fees which is a huge isn't that wonderful that your tenants pay to be managed you can't do that in residential so a very big advantage of triple net leases so your tenants actually have to pay for their prorated share of those various expenses if those increase with inflation which they always do your tenants have to absorb that and pay that cost next year right and the year after however long your lease is which is wonderful again residential you can do that the only thing that you can kind of try to help yourself out with with residential is increasing your rent either when the tenant moves out or depending on what province you're in you might be able to you might be allowed to increase your rent once per year usually it's it's limited to about two percent or two point nine percent I think in BC next year it's two point nine percent so that's not even really keeping up with the increasing costs of insurance taxes potentially property management all of those things so that's what a triple net lease is is it breaks it out so that the tenants pay a base rent plus their prorated share of the operating expenses and by prorated share I mean the prorated share of the building so say there's five tenants that you have in one commercial building and they each have say a thousand square feet they would each have 20 percent share of those operating expenses that they would have to pay I don't...