Lease Rate

AAA

DEFINITION of 'Lease Rate'

The amount of money paid over a specified time period for the rental of an asset, such as real property or an automobile. The lease rate that the lender earns from allowing someone else to use his property compensates him for not being able to put that property to another use during the term of the lease.

INVESTOPEDIA EXPLAINS 'Lease Rate'

In commercial real estate, the lease rate is commonly stated as a dollar amount per square foot of space per year. To get a true idea of the cost of renting a space, in addition to the lease rate, the potential tenant will need to know if the lease is single, double or triple net. In other words, whether it is he or the property owner who will be responsible for expenses such as utilities, maintenance and property taxes.





In the case of an automobile lease, the monthly payment on the vehicle is based on the car's expected depreciation and residual value (a predetermined amount that the car will be worth at the end of the lease term) as well as the lease rate, which is usually stated as a percentage. Through monthly payments, the lessee compensates the automobile dealer for both the vehicle's depreciation and for tying up assets in vehicles instead of investing that money elsewhere.

RELATED TERMS
  1. Net Present Value - NPV

    The difference between the present value of cash inflows and ...
  2. Net Operating Income - NOI

    A company's operating income after operating expenses are deducted, ...
  3. Triple Net Lease

    A lease agreement that designates the lessee (the tenant) as ...
  4. Landlord

    A real estate owner who rents or leases land or a building to ...
  5. Required Rate Of Return - RRR

    The minimum annual percentage earned by an investment that will ...
  6. Lessee

    The person who rents land or property from a lessor. The lessee ...
RELATED FAQS
  1. Which has performed better historically, the stock market or real estate?

    For the majority of U.S. history – or at least as far back as reliable information goes – housing prices have increased only ... Read Full Answer >>
  2. How can I calculate the Macaulay duration of a zero-coupon bond?

    The funds from operations is a measure of the amount of cash flow that a business's operations generates. Real estate investment ... Read Full Answer >>
  3. How did the Great Recession affect structural unemployment?

    The Great Recession greatly increased structural unemployment levels by creating a large disparity between the high supply ... Read Full Answer >>
  4. What risks are associated with a closed end investment?

    A closed-end fund is an investment instrument that is listed on an exchange and trades much like common stock shares. Its ... Read Full Answer >>
  5. Can an investor use leveraged ETFs to invest in the airline sector?

    As of 2015, there are no leveraged exchange-traded funds (ETFs) available to track the airline industry within the transportation ... Read Full Answer >>
  6. What's the difference between a collateralized mortgage obligation (CMO) and a mortgage-backed ...

    A mortgage-backed security, or MBS, and a collateralized mortgage obligation, or CMO, are different types of asset-backed ... Read Full Answer >>
Related Articles
  1. Home & Auto

    Tips For The Prospective Landlord

    Investing in rental property can generate serious income, but there's more to it than collecting rent.
  2. Entrepreneurship

    Top 10 Features Of A Profitable Rental Property

    Find out what factors you should weigh when searching for income-producing real estate.
  3. Taxes

    Tax Deductions For Rental Property Owners

    Besides creating ongoing income and capital appreciation, real estate provides deductions that can reduce the income tax on your profits.
  4. Home & Auto

    Simple Ways To Invest In Real Estate

    Owning property isn't always easy, but there are plenty of perks. Find out how to buy in.
  5. Entrepreneurship

    Find Fortune In Commercial Real Estate

    Investing in big buildings means big money - and bigger risks.
  6. Investing

    Commercial Real Estate: How to Invest Like a Pro

    Investing in commercial real estate can add stability to your portfolio. Here's how to do it.
  7. Personal Finance

    Commercial Real Estate: How it Works

    The ins and outs of what commercial real estate companies do.
  8. Investing

    Should You Buy Marijuana Stock?

    The legalization of marijuana has created a new investment niche: pot stocks.
  9. Forex

    Is Bitcoin Mining Still Profitable?

    Recent changes in technology and the creation of professional mining centers individual miners are asking themselves, is bitcoin mining still profitable?
  10. Professionals

    Will Higher Interest Rates Crush Real Estate?

    The Federal Reserve isn’t likely to raise interest rates until at least September, but real estate investors shouldn’t ignore the pending risk.

You May Also Like

Hot Definitions
  1. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  2. Productivity

    An economic measure of output per unit of input. Inputs include labor and capital, while output is typically measured in ...
  3. Variance

    The spread between numbers in a data set, measuring Variance is calculated by taking the differences between each number ...
  4. Terminal Value - TV

    The value of a bond at maturity, or of an asset at a specified, future valuation date, taking into account factors such as ...
  5. Rule Of 70

    A way to estimate the number of years it takes for a certain variable to double. The rule of 70 states that in order to estimate ...
  6. Risk Premium

    The return in excess of the risk-free rate of return that an investment is expected to yield. An asset's risk premium is ...
Trading Center