Even if you have leased/purchased commercial property before, brushing up on some of the most commonly used terms or acronyms will help during your future conversations.
Here are a few common terms to start with:
- Triple Net (NNN) Rent: A lease in which the tenant pays, in addition to rent, certain costs associated with a leased property, which may include property taxes, insurance premiums, repairs, utilities, and maintenances. There are also “Net Leases” and “NN“ (double net) leases, depending upon the degree to which the tenant is responsible for operating costs.
- Loan-To-Value (LTV): A ratio of how much money you're asking from a lender vs. the total value of what you want to purchase.
- Cash on Cash: Annual income over how much you actually invested. The amount invested could be just the amount your down payment was.
- Ad Valorem: A tax based on the assessed value of a piece of property.
Visit the Square Feet Blog's Commercial Real Estate Glossary to see more.