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Gather Your Inputs
First, identify the base rent, property taxes, insurance, maintenance, and rentable square feet. For example, let's say the base rent is $10,000 per month, property taxes are $5,000 per year, insurance is $2,000 per year, maintenance is $3,000 per year, and the rentable square feet is 1,000 sqft.
Calculate the Total Occupancy Cost
Next, calculate the total occupancy cost by adding the base rent to the sum of property taxes, insurance, and maintenance, then dividing by the rentable square feet. Using the example values, the calculation would be: Total Occupancy Cost = $10,000 + (($5,000 + $2,000 + $3,000) / 12) / 1,000 = $10,000 + ($10,000 / 12) / 1,000 = $10,000 + $8.33 = $10,008.33 per month
Calculate the Net Yield
Now, calculate the net yield by subtracting the base rent from the total occupancy cost, then dividing by the base rent. Using the example values, the calculation would be: Net Yield = ($10,008.33 - $10,000) / $10,000 = $8.33 / $10,000 = 0.000833 or 0.0833%
Avoid Common Mistakes
When performing the calculation, make sure to avoid common mistakes such as forgetting to divide by 12 when calculating the monthly property taxes, insurance, and maintenance, or using the wrong rentable square feet. Double-check your calculations to ensure accuracy.
Using the Calculator for Convenience
While it's essential to understand the underlying formula and how to perform the calculation manually, using a triple net lease calculator can be a convenient way to quickly calculate the total occupancy cost and net yield. Simply enter the base rent, property taxes, insurance, maintenance, and rentable square feet, and the calculator will do the rest.
Conclusion
In conclusion, calculating the triple net lease by hand requires a good understanding of the underlying formula and careful attention to detail. By following the steps outlined in this guide, you'll be able to perform the calculation manually and understand the results. However, for convenience and speed, using a triple net lease calculator is a great option.
Introduction to Triple Net Lease Calculator
The triple net lease calculator is a useful tool for calculating the total occupancy cost and net yield of a property. However, it's essential to understand the underlying formula and how to perform the calculation manually. In this guide, we'll walk you through the steps to calculate the triple net lease by hand.
What is a Triple Net Lease?
A triple net lease is a type of lease agreement where the tenant is responsible for paying all expenses related to the property, including property taxes, insurance, and maintenance. The landlord is only responsible for paying the base rent.
The Formula
The formula for calculating the triple net lease is: Total Occupancy Cost = Base Rent + (Property Taxes + Insurance + Maintenance) / Rentable Square Feet Net Yield = (Total Occupancy Cost - Base Rent) / Base Rent
Prerequisites
To perform the calculation, you'll need to know the following values:
- Base rent
- Property taxes
- Insurance
- Maintenance
- Rentable square feet