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Fiesta48 · 07-26-2021, 10:27 AM

That's 18750 per year. That's insane. Who's going to use it for 40 years? You gonna live that long? Run as fast as you can away.

NXR · 07-26-2021, 02:06 PM

Quote:

Originally Posted by bpu699

Not really. Its a 40 year lease, property reverts back to the developer in 40 years...

The closer you get to the end of the lease, the more worthless the property becomes...

How much would someone pay to "buy" the property with 2-3 years remaining on the lease? Very, very, little.

Its a game of chicken, played over 40 years...

You almost never see deals structured like this, which is what makes it so odd!

Kind of like buying a house and 30 years later handing it back to the bank...

Hawaii is full of these. They're called "leasehold". We looked at several condos built on leasehold properties, which normally seem to start as 99-year leases there.

One condo was much cheaper and it was because the leasehold was expiring in three years. The condo association had three choices: Renegotiate the leasehold which was going to add almost a thousand a month to each unit's HOA fee, abandon the buildings and incur the cost of removing the buildings and restoring the land to the original condition, or abandoning the buildings and agreeing to turn them over to the property owners at no charge.

I don't know what they decided to do but it was still a bit enticing IF the renegotiation option was selected, which was almost a certainty.

The price of the one we looked at was about $150K below market. With the $12K annual HOA increase coupled with the below-market level pricing because of the uncertainty, the breakeven would be 12 years down the road. By then people would be used to the high HOA fee and other properties may have caught up. May have.

Ray

dwirch · 07-26-2021, 02:22 PM

I don't know if this is everywhere, just here in Washington state, or not. The OP mentioning the $750k Andrew Steele Deal reminded of other "deals".

A couple of different people I know have "bought" land on indian reservations around here (Suquamish, Tulalip, etc.), wherein the sale is actually a 99 year lease. They can do anything they want on the land, including tearing down the home, building a new home, whatever. The catch is, at the end of the lease period, the land reverts back to the tribe.

Like I said, I'm not sure if this is everywhere, just a thing with the local tribes around here, or if it is a thing everywhere.

R.Wold · 07-26-2021, 02:32 PM

Hey it’s only $51/day.....

But yes, seriously, buying this would be an incredibly stupid idea no matter how you do the math.

lockinload · 07-26-2021, 03:50 PM

Curious where this property is?

Ray,IN · 07-26-2021, 03:57 PM

Quote:

Originally Posted by bpu699

Not really. Its a 40 year lease, property reverts back to the developer in 40 years...

The closer you get to the end of the lease, the more worthless the property becomes...

How much would someone pay to "buy" the property with 2-3 years remaining on the lease? Very, very, little.

Its a game of chicken, played over 40 years...

You almost never see deals structured like this, which is what makes it so odd!

Kind of like buying a house and 30 years later handing it back to the bank...

Many houses are sold in Hawaii this way, you lease the ground for 99 years, buy the house. Totally illogical to me, unless I was a seller.

Ljwt330 · 07-27-2021, 09:58 AM

This thread got me thinking about all the people who purchase homes on leased land.

My first question, to anyone who can answer, will a bank finance the complete "purchase", including the lease, or only the value of the structure/home?

My second question is, would the owner of the land, the lessor, allow his property to be encumbered by a mortgage?

Third question, do these types of sales usually go through the land owner, with his own company supplying the financing for the lease? In other words all sales and resales are financed by the developer.

bpu699 · 07-27-2021, 10:07 AM

Quote:

Originally Posted by Ljwt330

This thread got me thinking about all the people who purchase homes on leased land.

My first question, to anyone who can answer, will a bank finance the complete "purchase", including the lease, or only the value of the structure/home?

My second question is, would the owner of the land, the lessor, allow his property to be encumbered by a mortgage?

Third question, do these types of sales usually go through the land owner, with his own company supplying the financing for the lease? In other words all sales and resales are financed by the developer.

Great questions...

I would think you cant take out a loan on land you don't own...so, its never encumbered

Also, its a LEASE! What happens if you build a house and then a week later landlord decides to evict you?

Elwood58 · 07-27-2021, 10:10 AM

Don’t hold this against Andrew Steele. A few years ago he was detailing RVs. He has developed a big subscriber base, so folks are using that venue for all kinds of things.

Ljwt330 · 07-27-2021, 10:12 AM

Quote:

Originally Posted by bpu699

Great questions...

I would think you cant take out a loan on land you don't own...so, its never encumbered

Also, its a LEASE! What happens if you build a house and then a week later landlord decides to evict you?

That's the function of a lease. It protects the lessee as well as the lessor. Again, it depends on the terms of the lease, but unless you violated the terms, the "land lord" cannot evict you.

bpu699 · 07-28-2021, 10:05 AM

Quote:

Originally Posted by Elwood58

Don’t hold this against Andrew Steele. A few years ago he was detailing RVs. He has developed a big subscriber base, so folks are using that venue for all kinds of things.

I still enjoy his channel, but right now its just an advertising venue to sell RV's...

The artist that he has on there... I don't understand. He does nice graphical designs for RV's, and that's his bread and butter. But selling pictures of turtles, that to my eye don't look like anything especially artistic, surprises me...