Amortized TI: How Much Is the Landlord Really Charging Me?

Curated by Kory White · Fractional CRO, CRO Syndicate

👍 Yup or 👎 Nope — vote this up its category:

📅 Published Jun 21, 2026

Don’t get screwed.</text><text x="58" y="258" font-family="Arial,Helvetica,sans-serif" font-size="30" font-weight="600" fill="#6b5b4d">Leases, TI, NNN & buildouts — negotiated in your favor</text><g transform="translate(1010,86)" fill="none" stroke="#C0531F" stroke-width="9" stroke-linejoin="round"><rect x="20" y="40" width="150" height="130"/><line x1="20" y1="40" x2="95" y2="6"/><line x1="170" y1="40" x2="95" y2="6"/><rect x="50" y="80" width="36" height="36"/><rect x="104" y="80" width="36" height="36"/><rect x="74" y="128" width="42" height="42"/></g></svg>

Amortized TI: How Much Is the Landlord Really Charging Me?

Direct Answer

When a landlord gives you "extra" tenant-improvement money and amortizes it into your rent, you are taking a loan — and the interest rate is almost always worse than a bank's. Landlords amortize amortized TI at 8%–10% interest, sometimes 12%+, versus an SBA or equipment loan you could get at 6%–9%.

The math the landlord hopes you won't run: $100,000 of amortized TI over a 5-year (60-month) term at 9% costs you about $2,076 a month, or $24,912 a year — meaning you repay roughly $124,500 for $100,000, an extra $24,500 in interest. Stretch the same loan over a 10-year term and the monthly drops but the total interest balloons to roughly $52,000.

The single biggest money move: ask for the interest rate in writing and amortize it yourself before signing — landlords quote a monthly rent bump and never name the rate, which is how a 12% loan hides in plain sight. Negotiate the rate down toward your cost of capital, shorten the amortization to match the term, and always check whether amortized TI is cheaper than just funding the buildout yourself or financing it through a real lender.

If the landlord wants 10%+, borrow the money elsewhere and keep the buildout debt off your lease.

What "Amortized TI" Really Is

Tenant-improvement allowance comes in two flavors. The base allowance is free money the landlord contributes to win your lease — you don't pay it back. Amortized (or "additional") TI is different: it's money the landlord *lends* you for the buildout and recovers through a rent add-on, with interest, over the lease term.

Two reasons it matters:

It's debt, priced as rent. The monthly rent increase is really a loan payment. Treat it like one.
The rate is usually hidden. Landlords quote the rent bump, not the interest rate. A $2,076/month add-on on $100,000 over 5 years *sounds* fine until you compute that it's a 9% loan.

Amortized TI is convenient and fast, but convenience at 8%–12% is expensive money.

The Real Cost — Run The Numbers

Here's what amortized TI actually costs at common terms. Assume $100,000 of additional TI:

5-year term at 8%: about $2,028/month, roughly $21,650 total interest.
5-year term at 9%: about $2,076/month, roughly $24,500 total interest.
5-year term at 10%: about $2,125/month, roughly $27,500 total interest.
10-year term at 9%: about $1,267/month — lower payment, but roughly $52,000 total interest because you pay for twice as long.

The pattern: a lower monthly payment from a longer term is more expensive overall. And every percentage point on the rate is real money — the spread between 8% and 12% on a $100k 5-year loan is roughly $12,000 in extra interest.

flowchart TD A[Landlord offers extra TI] --> B{Is it base allowance or amortized?} B -->|Base: free| C[Take it - no repayment] B -->|Amortized: a loan| D[Demand the interest rate] D --> E{Rate vs. your cost of capital} E -->|Landlord rate higher| F[Borrow elsewhere SBA / equipment loan 6-9%] E -->|Landlord rate competitive| G[Amortize over term length, not longer] F --> H[Keep buildout debt off the lease] G --> I[Get rate + schedule in writing]

The Tricks Hidden In The Add-On

Amortized TI is a fine print game. Watch for these:

The unnamed rate. The most common trick — a monthly bump with no stated interest rate. Always back into the rate and confirm it in writing.
Amortization longer than your term. If TI amortizes over 10 years but your lease is 7, the unpaid balance becomes a balloon at renewal or termination — you owe the remainder if you leave early.
TI repayment surviving early termination. Many leases accelerate the unamortized TI balance if you break the lease — read the termination and default clauses.
Interest charged on the base allowance too. Make sure the rate applies only to the *additional* TI you're borrowing, not the free base allowance.
Compounding and fees. Confirm simple amortization, no origination fee, and no compounding tricks layered on top of the headline rate.

When Amortized TI Is Actually The Right Call

It's not always a trap. Amortized TI makes sense when:

You're short on capital and need to preserve cash for operations or inventory.
The rate is genuinely competitive with what you'd pay a lender — at 6%–8% with no early-termination acceleration, it can beat a small-business loan's hassle.
The buildout is landlord-specific (improvements you couldn't take with you), so financing it through the lease aligns with the asset.
You have strong term certainty and won't leave early, so balloon risk is low.

The deciding question is always the rate versus your alternatives, plus the early-exit terms.

How Not To Get Screwed By The Landlord

This is where tenants overpay quietly for years:

Get the interest rate in writing — period. No rate named, no signature. Compute the effective rate from any quoted monthly bump.
Negotiate the rate toward your cost of capital. Landlords open high; 8%–10% is common but 6%–8% is achievable for strong tenants in a soft market.
Match amortization to the lease term, never longer, to kill balloon and acceleration risk.
Strike or cap early-termination acceleration so leaving early doesn't trigger the full unpaid balance.
Compare against real financing. Price an SBA 7(a), equipment loan, or line of credit at 6%–9%. If you can borrow cheaper, fund the buildout yourself and keep the debt off your rent and off the landlord's books.
Maximize the free base allowance first. Every dollar of *non-amortized* allowance you negotiate is a dollar you never repay with interest.

flowchart LR A[Quoted monthly TI add-on] --> B[Back into the interest rate] B --> C[Compare to SBA / equipment loan 6-9%] C --> D{Landlord cheaper?} D -->|No| E[Borrow elsewhere] D -->|Yes| F[Match amort to term] F --> G[Strike early-exit acceleration] G --> H[Get rate + schedule signed]

A Quick Decision Framework

Separate base allowance from amortized TI — one is free, one is a loan with interest.
Demand the interest rate in writing and amortize it yourself before signing.
Compare the rate to real financing at 6%–9%; borrow elsewhere if the landlord wants 10%+.
Match amortization to the lease term to avoid balloon and acceleration risk.
Negotiate the biggest free allowance first — that's the money you never repay.

FAQ

What interest rate do landlords charge on amortized TI? Typically 8%–10%, sometimes 12% or higher. The rate is usually unstated — landlords quote a monthly rent increase instead. Always back into the effective rate and get it in writing before agreeing.

How much does $100,000 of amortized TI cost over a 5-year lease? At 9% over 60 months, roughly $2,076 a month, or about $24,912 a year, repaying around $124,500 total — about $24,500 in interest on top of the $100,000. Higher rates and longer terms cost more.

Is amortized TI a loan? Yes. It's money the landlord lends you for the buildout and recovers through a rent add-on with interest over the term. Treat it exactly like debt and compare it to other financing.

What happens to amortized TI if I leave early? Many leases accelerate the unamortized balance on early termination or default, meaning you owe the remaining principal at once. Read the termination clause and negotiate to strike or cap that acceleration, and never let TI amortize longer than your lease term.

Should I take amortized TI or finance the buildout myself? Compare the landlord's rate to an SBA 7(a), equipment loan, or line of credit at 6%–9%. If you can borrow cheaper, fund the buildout through a real lender and keep the debt off your lease. Amortized TI only wins when the rate is competitive and the early-exit terms are clean.

Sources

CBRE — Tenant build-out and TI allowance market reports.
JLL — Tenant-improvement financing and amortization guides.
Cushman & Wakefield — Tenant advisory on amortized TI and lease economics.
NAIOP (Commercial Real Estate Development Association) — Lease structuring and TI research.
BOMA International — Lease administration and improvement standards.
U.S. Small Business Administration (SBA) — 7(a) and 504 loan terms and rates.
RSMeans (Gordian) — Commercial buildout cost data for sizing TI needs.
The Appraisal Institute — Tenant-improvement valuation and amortization methodology.

Keep reading

<svg xmlns="http://www.w3.org/2000/svg" viewBox="0 0 1200 340" role="img" aria-label="Amortized TI: How Much Is the Landlord Really Charging Me? — PULSE Buildouts"><rect width="1200" height="340" fill="#EBE9DE"/><rect width="14" height="340" fill="#C0531F"/><text x="58" y="116" font-family="Arial,Helvetica,sans-serif" font-size="32" font-weight="800" letter-spacing="3" fill="#C0531F">PULSE BUILDOUTS · COMMERCIAL REAL ESTATE</text><text x="56" y="198" font-family="Arial,Helvetica,sans-serif" font-size="60" font-weight="800" fill="#2b2b2b">Save money. Don’t get screwed.</text><text x="58" y="258" font-family="Arial,Helvetica,sans-serif" font-size="30" font-weight="600" fill="#6b5b4d">Leases, TI, NNN &amp; buildouts — negotiated in your favor</text><g transform="translate(1010,86)" fill="none" stroke="#C0531F" stroke-width="9" stroke-linejoin="round"><rect x="20" y="40" width="150" height="130"/><line x1="20" y1="40" x2="95" y2="6"/><line x1="170" y1="40" x2="95" y2="6"/><rect x="50" y="80" width="36" height="36"/><rect x="104" y="80" width="36" height="36"/><rect x="74" y="128" width="42" height="42"/></g></svg>

# Amortized TI: How Much Is the Landlord Really Charging Me?

## Direct Answer

When a landlord gives you "extra" tenant-improvement money and amortizes it into your rent, you are taking a loan — and the interest rate is almost always worse than a bank's. Landlords amortize amortized TI at **8%–10% interest**, sometimes **12%+**, versus an SBA or equipment loan you could get at **6%–9%**. The math the landlord hopes you won't run: **$100,000** of amortized TI over a **5-year (60-month)** term at **9%** costs you about **$2,076 a month**, or **$24,912 a year** — meaning you repay roughly **$124,500 for $100,000**, an extra **$24,500 in interest**. Stretch the same loan over a **10-year** term and the monthly drops but the total interest balloons to **roughly $52,000**. The single biggest money move: **ask for the interest rate in writing and amortize it yourself** before signing — landlords quote a monthly rent bump and never name the rate, which is how a **12%** loan hides in plain sight. Negotiate the rate down toward your **cost of capital**, shorten the amortization to match the term, and always check whether amortized TI is cheaper than just funding the buildout yourself or financing it through a real lender. If the landlord wants **10%+**, borrow the money elsewhere and keep the buildout debt off your lease.

## What "Amortized TI" Really Is

Tenant-improvement allowance comes in two flavors. The **base allowance** is free money the landlord contributes to win your lease — you don't pay it back. **Amortized (or "additional") TI** is different: it's money the landlord *lends* you for the buildout and recovers through a rent add-on, with interest, over the lease term. Two reasons it matters:

- **It's debt, priced as rent.** The monthly rent increase is really a loan payment. Treat it like one.
- **The rate is usually hidden.** Landlords quote the rent bump, not the interest rate. A **$2,076/month** add-on on **$100,000** over 5 years *sounds* fine until you compute that it's a **9%** loan.

Amortized TI is convenient and fast, but convenience at **8%–12%** is expensive money.

## The Real Cost — Run The Numbers

Here's what amortized TI actually costs at common terms. Assume **$100,000** of additional TI:

- **5-year term at 8%:** about **$2,028/month**, roughly **$21,650 total interest**.
- **5-year term at 9%:** about **$2,076/month**, roughly **$24,500 total interest**.
- **5-year term at 10%:** about **$2,125/month**, roughly **$27,500 total interest**.
- **10-year term at 9%:** about **$1,267/month** — lower payment, but roughly **$52,000 total interest** because you pay for twice as long.

The pattern: a **lower monthly payment from a longer term is more expensive overall**. And every percentage point on the rate is real money — the spread between **8%** and **12%** on a $100k 5-year loan is roughly **$12,000** in extra interest.

```mermaid
flowchart TD
  A[Landlord offers extra TI] --> B{Is it base allowance<br/>or amortized?}
  B -->|Base: free| C[Take it - no repayment]
  B -->|Amortized: a loan| D[Demand the interest rate]
  D --> E{Rate vs. your<br/>cost of capital}
  E -->|Landlord rate higher| F[Borrow elsewhere<br/>SBA / equipment loan 6-9%]
  E -->|Landlord rate competitive| G[Amortize over term length,<br/>not longer]
  F --> H[Keep buildout debt<br/>off the lease]
  G --> I[Get rate + schedule<br/>in writing]
```

## The Tricks Hidden In The Add-On

Amortized TI is a fine print game. Watch for these:

- **The unnamed rate.** The most common trick — a monthly bump with no stated interest rate. Always back into the rate and confirm it in writing.
- **Amortization longer than your term.** If TI amortizes over **10 years** but your lease is **7**, the unpaid balance becomes a **balloon at renewal or termination** — you owe the remainder if you leave early.
- **TI repayment surviving early termination.** Many leases accelerate the unamortized TI balance if you break the lease — read the **termination and default** clauses.
- **Interest charged on the base allowance too.** Make sure the rate applies only to the *additional* TI you're borrowing, not the free base allowance.
- **Compounding and fees.** Confirm simple amortization, no origination fee, and no compounding tricks layered on top of the headline rate.

## When Amortized TI Is Actually The Right Call

It's not always a trap. Amortized TI makes sense when:

- **You're short on capital** and need to preserve cash for operations or inventory.
- **The rate is genuinely competitive** with what you'd pay a lender — at **6%–8%** with no early-termination acceleration, it can beat a small-business loan's hassle.
- **The buildout is landlord-specific** (improvements you couldn't take with you), so financing it through the lease aligns with the asset.
- **You have strong term certainty** and won't leave early, so balloon risk is low.

The deciding question is always **the rate versus your alternatives**, plus the early-exit terms.

## How Not To Get Screwed By The Landlord

This is where tenants overpay quietly for years:

- **Get the interest rate in writing — period.** No rate named, no signature. Compute the effective rate from any quoted monthly bump.
- **Negotiate the rate toward your cost of capital.** Landlords open high; **8%–10%** is common but **6%–8%** is achievable for strong tenants in a soft market.
- **Match amortization to the lease term**, never longer, to kill balloon and acceleration risk.
- **Strike or cap early-termination acceleration** so leaving early doesn't trigger the full unpaid balance.
- **Compare against real financing.** Price an SBA 7(a), equipment loan, or line of credit at **6%–9%**. If you can borrow cheaper, fund the buildout yourself and keep the debt off your rent and off the landlord's books.
- **Maximize the free base allowance first.** Every dollar of *non-amortized* allowance you negotiate is a dollar you never repay with interest.

```mermaid
flowchart LR
  A[Quoted monthly TI add-on] --> B[Back into the<br/>interest rate]
  B --> C[Compare to SBA /<br/>equipment loan 6-9%]
  C --> D{Landlord cheaper?}
  D -->|No| E[Borrow elsewhere]
  D -->|Yes| F[Match amort to term]
  F --> G[Strike early-exit<br/>acceleration]
  G --> H[Get rate + schedule<br/>signed]
```

## A Quick Decision Framework

1. **Separate base allowance from amortized TI** — one is free, one is a loan with interest.
2. **Demand the interest rate in writing** and amortize it yourself before signing.
3. **Compare the rate to real financing** at **6%–9%**; borrow elsewhere if the landlord wants 10%+.
4. **Match amortization to the lease term** to avoid balloon and acceleration risk.
5. **Negotiate the biggest free allowance first** — that's the money you never repay.

## FAQ

**What interest rate do landlords charge on amortized TI?**
Typically **8%–10%**, sometimes **12% or higher**. The rate is usually unstated — landlords quote a monthly rent increase instead. Always back into the effective rate and get it in writing before agreeing.

**How much does $100,000 of amortized TI cost over a 5-year lease?**
At **9%** over **60 months**, roughly **$2,076 a month**, or about **$24,912 a year**, repaying around **$124,500 total** — about **$24,500 in interest** on top of the $100,000. Higher rates and longer terms cost more.

**Is amortized TI a loan?**
Yes. It's money the landlord lends you for the buildout and recovers through a rent add-on with interest over the term. Treat it exactly like debt and compare it to other financing.

**What happens to amortized TI if I leave early?**
Many leases **accelerate the unamortized balance** on early termination or default, meaning you owe the remaining principal at once. Read the termination clause and negotiate to strike or cap that acceleration, and never let TI amortize longer than your lease term.

**Should I take amortized TI or finance the buildout myself?**
Compare the landlord's rate to an **SBA 7(a), equipment loan, or line of credit at 6%–9%**. If you can borrow cheaper, fund the buildout through a real lender and keep the debt off your lease. Amortized TI only wins when the rate is competitive and the early-exit terms are clean.

## Sources

- CBRE — Tenant build-out and TI allowance market reports.
- JLL — Tenant-improvement financing and amortization guides.
- Cushman & Wakefield — Tenant advisory on amortized TI and lease economics.
- NAIOP (Commercial Real Estate Development Association) — Lease structuring and TI research.
- BOMA International — Lease administration and improvement standards.
- U.S. Small Business Administration (SBA) — 7(a) and 504 loan terms and rates.
- RSMeans (Gordian) — Commercial buildout cost data for sizing TI needs.
- The Appraisal Institute — Tenant-improvement valuation and amortization methodology.

Was this helpful?

Related in the library

Amortized TI: How Much Is the Landlord Really Charging Me?

Amortized TI: How Much Is the Landlord Really Charging Me?

Direct Answer

What "Amortized TI" Really Is

The Real Cost — Run The Numbers

The Tricks Hidden In The Add-On

When Amortized TI Is Actually The Right Call

How Not To Get Screwed By The Landlord

A Quick Decision Framework

FAQ

Sources

What does the score mean?