What do you guys think of home purchases that are land lease?

NEW -> Contingent Buyer Assistance Program
I've looked at a few land lease homes and condos in Palm Springs....there are quite a few of them there (Indian Land). Most of the leases run 50 years at a clip, so I wouldn't consider one unless it had at least 30 left on it.

It brings the purchase price of the home down because you are only buying the structure, not the land. Also, lower purchase price means lower property taxes. A friend of mine pays 90.00 a month to lease the land her condo is on. 90x12 = 1080 a year. My guess is you'd save 2000 or so a year on taxes. Over time, that's a nice chunk of change.

Not sure if I'd actually go for it though.....
 
I would just be worried that the HOA dues and lease pmts..would increase to the point where they cancel out the reduction in property taxes..and of the owner/leasor decided to sell the land...I've seen ad's for manufactured homes on the newport bay listed in the high 300,000's but the land lease is $1400 a month with annual increases..not sure what the HOA dues are..seems like a bad situation to get into
 
My in-laws live in a land-lease community. I've heard annuals as high as $30K, I think it's currently 22Kish. Who lives here? Rich retirees. Not like well-to-do rich, but like really rich.

What do they get for the money. The landscaping is well-kept. The private golf course (must be resident to pay more to join) is 2nd best in the 25+ mile radius. The community HOA ensures safety, quiet, cleanliness as if it was a gated community. It does have a gate, but it's not manned and it's more functionally ornate. The mountain views are top-notch, great weather, and the entire property has horse cart rides, private lake, annual events, etc.

When I first heard my in-laws were moving there, I thought 'that seems kinda...dumb.' But after going there, I get it. The loss of equity and cash is not something these people care about. Most of them were CEOs or entrepreneurs, they are enjoying their time and money from busting their ass 50+ hours a week when they were younger.
 
In my book, 50+ hours a week is NOT busting your ass my friend...but I digress.

My buddy's 90 bucks goes strictly to land lease, she pays a separate HOA bill that handles the landscaping, community pools, etc. Paying 1400 a month seems a little much ! And it's not deductible, right ?
 
Beacon Bay in Newport Beach has always been on my short list of places I'd buy with my imaginary millions. I love the location and the neighborhood feel of it. It does intrigue me that even though it is a land lease people still buy the houses and then tear them down and rebuild.

Of course I've been known to be completely reckless in my spending of my make believe money - I so would have bought into El Morro ten years ago! I'm not sure I'd risk a land lease if I actually had millions to spend on real estate.
 
Another good example is Monarch Bay, which is like Emerald Bay at a 50% discount because the owners only have a 40% interest in the land and the ability to buy it out doesn't come up for about 5 more years.

Beacon Bay is long term land lease from the City and the rent is set based on the purchase price of the home.

I bought an old Irvine Company land lease home about 10 years ago. There was a complicated formula for deriving the FMV purchase price, but it allowed me to buy more home with a lease and then buy out the land when I built equity without additional down. Not a good comaprison in this market.
 
1.) it is harder to obtain financing for leasehold land. banks find it more difficult to assess the true value

2.) it affects the re-sale value of the home. Not everyone wants to purchase a leasehold property.

3) The lease term must be beyond 30 years.
 
You must log in or register to reply here.
Back
Top