Are you appraising the owners interest or the tenants interest? The owner owns fee simple interest (unless the land is leased). The tenant owns the leasehold interest.
Sometimes these things can bogle the mind late in the week.
that is rented out for 1 year or less you value the Fee Simple Estate. Exception would be if the tenant had a long term lease or possibly if it was say a three year lease with options. Then you really have to consider the Leased Fee Estate. Unless of course you are valuing the tenants interest like M Leggett answered.
The simplest way to determine if something is Fee Simple is to ask the quest, Are the rights that I am appraising inheritable? If they cannot be conveyed in the estate, they are not fee simple. We had this question about Site Condos. What is the interest in a Site Condo? It is fee simple because the interest could be passed on in the estate and is inheritable.
You're doing an appraisal for the property owner or someone who is purchasing a property, it is Fee Simple no matter whether or not it is leased. Generally, the only time you will have something other than Fee Simple in that line is where the site is owned by someone else. There are private developments where the development owns the land and all the homes are on 100 year leases of the sites. As a result, you do a 1004 but are showing a Leased Fee.