Q: What is CAM?
A: CAM stands for Common Area Maintenance, but it has been a buzz word in our industry and has come to mean a variety of things. It is generally used to calculate expenses on an investment property that a landlord will want to pass through to their tenant. Customary CAM charges might include: snow removal, landscaping, elevator maintenance, janitorial for common areas, and sometimes landlords will also include management fees. We can help clarify these charges/expenses with you.
Q: What is the difference between a net lease (NNN lease) and a gross lease?
A: The term NNN Lease, or Triple Net Lease, refers to a lease where the tenant is responsible for not only the rent but the operating expenses also. The NNN, or Net-Net-Net, generally refers to the Common Area Maintenance (CAM), real estate taxes, and insurance. The tenant bears the entire risk of unexpected changes in operating expenses. With a Gross Lease the rent is all-inclusive. The landlord pays all or most expenses associated with the property, including taxes, insurance, and maintenance out of the rents received from tenant. The tenant usually pays a fixed amount each month, and nothing more. The Landlord is one who bears the risk of all unexpected changes in operating expenses. We can review the best type of commercial lease for you.
Q: What does the term ‘build-out’ mean?
A: Every business has its own jargon and the commercial real estate business is no exception. Many office and retail buildings start out with tenant spaces consisting of little more than four walls and a door. The idea is that the spaces will be finished to meet the specific needs of each tenant.
The process of finishing this raw space is known as the "build-out." We can help you with extensive negotiations between the building owner (landlord) and the tenant over:
1. What improvements will be made?
2. Who will pay for these improvements?
3. Who will be in charge of getting the work done?
4. What will the tenant be permitted (or required) to remove at the end of the lease?
Q: What is a §1031 Exchange?
A: A §l031 Exchange is a transaction in which a taxpayer is allowed to exchange one investment property for another by deferring the tax consequence of a sale. The transaction is authorized by §1031 of the IRS Code.
The IRS Code actually reads: "No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment, if such property is exchanged solely for property of like kind, which is to be held either for productive use in a trade or business or for investment." We can help you through this process.