1. What is Net Lease Property?

A net lease is a contractual agreement where the tenant pays some or all of the property expenses that would normally be paid by the property owner. In a net lease, the tenant is responsible for property taxes, insurance, and maintenance costs in addition to rent.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• \( \text{Rental Income} \) — Gross rent collected from tenant (USD/month)
• \( \text{Operating Expenses} \) — Property expenses paid by landlord (USD/month)

Explanation: This calculation shows the actual income the property owner receives after accounting for expenses they're responsible for in a net lease arrangement.

3. Importance of Net Income Calculation

Details: Calculating net income is crucial for evaluating the true profitability of an investment property and making informed financial decisions about property acquisitions.

4. Using the Calculator

Tips: Enter the gross rental income and operating expenses in USD/month. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between net lease and gross lease?
A: In a gross lease, the landlord pays all property expenses. In a net lease, the tenant pays some or all expenses.

Q2: What expenses are typically included in operating expenses?
A: Common expenses include property taxes, insurance, maintenance, utilities, and sometimes even structural repairs.

Q3: How does this differ from NOI calculation?
A: NOI (Net Operating Income) typically includes all income and expenses, while this focuses specifically on the landlord's net income in a net lease scenario.

Q4: Should I include mortgage payments in operating expenses?
A: No, mortgage payments are financing costs, not operating expenses. Only include property-related operating costs.

Q5: What's a good net income percentage for net lease properties?
A: This varies by market, but many investors look for properties where net income is at least 60-70% of gross rent.