Land lease

General Real Estate Investing
1

Can someone explain land leases to me? I found a nice ranch to rehabb but it has a 99 year land lease.

Thanks
auggflo

2

Howdy Auggflo:

I saw a lot of these in Houston in the mid 70’s. The apartment builder would lease the land instead of paying cash for it. The lender agreed as long as the term of the lease was long enough. It was a way to get more leverage. Buyers I tried to sell to did not like the land lease deals, they wanted to own the land. I tried to get the land owner to sell but they wanted too much money and the deal did not work. It is my understanding that some high rise buildings are also built on leased land. I do not know about a ranch, I think I would want to own the dirt, but if you can raise cows and other stuff and make money I guess it would not matter. You may be able to get a buy out price or an option agreement to buy the land.

3

That means the land is not for sale, only the use of it for 99 years. Think of it kind of like a trailer park, some trailer parks. You own the trailer and the use of the land, but ultimately the park owner owns the ground beneath. For example, the Grange Hall in my town has a 99 year Landlease with the town, (23 remaining to date). The Grange can do whatever they want on the property, but when their lease is up they have to negotiate another lease or turn it over to the town, building and all

4

Does anyone know anything about a land-lease house purchase situation in Pennsylvania? I have a house in mind, but the owner of the development will only sell me the house with a land-lease contract. Please don’t reply if you aren’t familiar specifically with Pennsylvania law or practice, because I think different states have different contracts.

Thanks!
Carol