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The value of income producing property is directly related to the income the property produces. Most common types of leases for residential income properties are Month to Month Tenancy (Periodic Tenancy) or an "Estate For Years" (a lease for a definite period of time).

Types of Leases:

1. Flat, Fixed, or Straight Lease - Rent is fixed sum paid
periodically throughout the lease period.

2. Graduated Lease - Contains some sort of escalator clause
A. Step-up lease - rent is increased in a series of steps
over a prescribed period of time.
B. Index Lease - Rent is tied to an index such as the CPI

3. Percentage Lease - Landlord becomes a partner; rent is based on a minimum and a percentage of the tenants GROSS receipts above some minimum. Sometimes referred to as a combination lease.

4. Gross Lease - Tenant pays a certain amount, landlord pays all the expenses. This provides the landlord with a gross rental income.

5. Net Lease - Tenant pays the rent and also the expenses. If the tenant pays all the expenses, it is referred to as a "triple net" or "net, net, net" lease. In effect, the landlords rent is a net income to him.

6. Sandwich Lease - Lease between the primary lease and the primary lease and the operating lease.

7. Ground Lease - Lease of the land only. Based on the principle that real estate is too valuable to sell. If you can afford to hold it, you keep it in the family, never selling, only leasing. Usually the improvements will become the property of the landowner when the lease expires.