LAND LEASE formula - Posted by BRIZ

import · January 16, 2006, 9:22pm

Posted by Levi on January 17, 2006 at 14:50:19:

Land. Thats what happens in my area. Building rents are primarily determined by what the market will bear. Land leases are less common and are typically based upon land value.

import · January 16, 2006, 9:22pm

Posted by BRIZ on January 16, 2006 at 22:22:17:

I’ve been offered a 50 year land lease on a commercial building.

How do you determine a fair price on a land lease?

Is there a standard % based on the value of the land assessment?

import · January 17, 2006, 4:30pm

No - Posted by gerald(tx)

Posted by gerald(tx) on January 17, 2006 at 17:30:06:

I think the other poster didn’t understand your question. He’s thinking of leasing land.

There is no formula, sometimes no rhyme or reason. Usually, the total payment is just a slight bit less than what your payments would normally be on an outright sale.

You’ll get all the benefits of ownership if structured correctly, probably for the rest of your lifetime. Only thing, after it’s over, you have nothing to leave to your heirs. That’s the tradeoff for your discount. So the question is, how much is that worth to you?

gerald

import · January 17, 2006, 10:47am

Re: LAND LEASE formula - Posted by Levi

Posted by Levi on January 17, 2006 at 11:47:01:

I would say a yearly rate at 7% to 10% of fair market value is fair. Probably with adjustments every 5 or 10 years.

import · January 17, 2006, 11:39am

Re: LAND LEASE formula - Posted by BRIZ

Posted by BRIZ on January 17, 2006 at 12:39:53:

and would this be on the value of the land only?
or the building and land?

thank you!