What type of lease allows a tenant to pay a low rental rate while covering all operating expenses?

A net lease is characterized by the tenant paying a base rental amount while also covering additional operating expenses associated with the property. These expenses may include property taxes, insurance, and maintenance costs, which can result in a lower base rent compared to other lease types. This arrangement can be advantageous for landlords since it can lead to more predictable cash flow and reduced financial risk, as the tenant takes on additional cost responsibilities.

In contrast, a gross lease typically has the landlord cover most or all operating costs, meaning the tenant pays a flat rental rate without worrying about the variable expenses associated with property management. Percentage leases are more common in retail settings where rent is based on a percentage of the tenant's sales, and a proprietary lease relates to the ownership of cooperative apartments. Therefore, the distinguishing feature of a net lease is how it allows the tenant to benefit from a lower base rental rate by taking on more financial responsibility for the property's operating expenses.