The Straight Lease vs. the Graduated Lease

When it comes to real estate investments many people opt to purchase property with the desire to rent the property out and draw rental income. This has long since been proven a solid means of recouping one’s financial expenditure. It has also provided the means of making a profit from the initial investment. Of course, in order to make such a process workable it is necessary to have a lease put in place so as to secure income. The alternative option would be to simply allow the person to rent month to month, but the ability to draw an income when there may be extended periods of time when the property is unoccupied because the renter moved out is a foolish option. Again, a lease should be put in place so as to secure the rental income. There are a number of different types of lease options one could utilize, but the two most common are the straight lease and the graduated lease.

The straight lease is the most common leasing option available and it simply involves affixing a specific price over a specific period of time. For example, if one opts to rent out a home the lease may set the terms at $1,000 a month for a period of 12 months. The individual, of course, is then obligated into 12 month agreement without breaking the lease. A graduated lease is similar to the straight lease, but the property owner reserves the right to increase or decrease the amount of the lease either at will or within certain agreed upon conditions. Generally, graduated leases are rare, but they have been employed by landlords who discover their tenants may be problematic or are causing property damage or simply because of rising taxes or real estate value.