Full service gross, often abbreviated to FSG, refers to a lease that requires the owner of a property to pay major operating expenses related to the property. These expenses generally include maintenance, housekeeping, repairs, utility bills, insurance and ad valorem taxes. A property owner can calculate FSG rent based on several factors, including past FSG rent prices and the current operating expenses of similar properties.
Make a list of each of the expenses that you are responsible for as the property owner in an FSG lease. Generally, this will include all the essential operating costs for the property such as electricity, but it will not include optional ones such as Internet service.
Determine the current average monthly costs for each of the expenses that will be covered under the FSG lease. If you have owned the property for some time, you can use recent bills to determine an average monthly cost. If you own similar properties, you can use the monthly bills from those properties to determine an average figure that each of the covered costs may run per month. You will also need to include tax cost, which may be paid on a yearly basis. The average yearly ad valorem taxes can be divided by 12 to get an average monthly cost.
Add the numbers for each of the covered costs to get a total approximate figure for monthly major operating expenses.
Add the monthly amount that you wish to charge for rent on the property. This amount can be determined only by you as the property owner, but you may wish to consider rent prices on comparable properties in the area when determining this figure if you have not already done so. This new figure, which adds the base rent to the operating expenses, is your rent price based on FSG. This price will be higher than rents that do not cover major operating expenses.
- When you advertise your property, or when you tell potential tenants the rent, it is important that you let them know that this is for an FSG lease. Since FSG lease prices are higher, some tenants may initially be deterred until you explain that all major operating expenses are covered and that it could be a savings for them in the long term.
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