Cosmos The idea is not new but I think you will find that getting financing for the sale of the home would be difficult. Commercial property is often done like this. I wish I would have experimented with this idea 30 years ago. There is an area of montreal where I started investing back in the 70’s where I would own half the area now, if only this idea would work. Of course the area has become a yuppie area now. O how I could have, should have, would have?
Get informed, it may be possible, then come back and post your results.
Hawaii is the classic example.
I own three units in a 40+ story highrise in downtown Honolulu. Bought them on foreclosure. I pay what is termed lease-rent for the property – about $1,300 per quarter for all three. The lease is up in 2053. In Hawaii, it is a common practice to buy “lease-hold” properties as they are affordable to most anyone. There are drawbacks though the biggest plus is the lower cost.
Someone on this thread made comment that one is either high or stupid to do such a deal. Well, come here and try to say that. All three of my properties have more than doubled in value in the past 3 years. I clear several hundred dollars per unit each month. Yes, free and clear of all expenses and reserves, and lease-rents, etc.
There is a lot to leasehold property. Hawaii has made it a science. Local banks understand the risks and for those who have used their stupidity and drug-abuse to study the leasehold concept, we do quite well.
You can make fair $$$ at it, without being stupid or high.
Posted by IA Jeff on November 04, 2004 at 07:31:10:
Check out the radio archives. I think Dan Fink does an interview with Terry Vaughn that discusses this very thing. It is very popular in certain areas (where Dan is from).
RE: sell the house, lease out the land - Posted by Brent_IL
Posted by Brent_IL on November 03, 2004 at 20:57:21:
FHA will finance housing with ground leases if it’s commonplace for the area, i.e., not tax scamish. Most of the houses in Hawaii are built on leased land. Ray Kroc built his early McDonald?s on leased land subordinated to the construction loans.
Posted by Todd-OH on November 03, 2004 at 18:46:49:
Made famous by William Zeckendorf an investor from the 50s and 60s.
Because the land does not depreciate and is of no benifit for tax purposes what you do is only purchase the building to pump up your cash flow and lease the land on a triple net lease from the seller.
It’s better than asking the seller to carry a second and can lower your cost of getting into a property.
The price of property involve the land and building/house. Depending on the area/location, you also have to factor in the land. People can buy a house with the land with no problem. The only way a person “may” consider buying a house and leasing the land is if they are high or stupid.
Posted by Mary in CA on November 03, 2004 at 12:43:33:
Not really all that new, it’s used in commercial all the time. i.e. “Build to Suit” - landlord owns the land, and either he builds suitable building or the tenant builds it. Ususally long term leases, for obvious reasons.
How were you thinking of using it? In residential? Build a house to suit tenant? Or ???
Re: NEW IDEA sell the house, lease out the land - Posted by chris-atl
Posted by chris-atl on November 03, 2004 at 11:58:57:
Yeah, but MH owners can move their house somewhere else if need be. Why would someone buy a fixed house on land they do not own? It’s like renovating a property you only have a lease on.