Texas Real Estate Brokerage Sales Apprentice Education (SAE) Practice Exam

What does net rent refer to?

1. The rental income paid to a real estate agent

2. The rent paid to the lessor or landlord

3. The profit made by the property owner on leasing

4. The cost of leasing commercial equipment

The correct answer is: The rent paid to the lessor or landlord

Net rent refers to the rental income that is paid to the lessor or landlord. This term encompasses the actual amount of money that the tenant pays to occupy the property, which is agreed upon in the lease contract. It is essential to understand that net rent is a straightforward concept focusing on the cash flow between the tenant and landlord, void of additional expenses or deductions. While terms like profit or rental income can create confusion, net rent specifically denotes the agreed-upon amount the landlord receives, setting it apart from the total income generated from the property once expenses are considered. In the case of commercial leases, net rent may also come into play when addressing expenses like property taxes, insurance, and maintenance, as tenants may be responsible for those costs. However, the term itself primarily narrows down to the rental payment made by the tenant to the landlord.