The most ওtraditional form of homeownership is to own a house and the land on which it is built. Those who wish to avoid the costs of outdoor maintenance and upkeep might instead purchase a condominium or townhouse. There is another homeownership option: buying only the home and leasing the land 𒊎it occupies.

Purchasing a home in a leased-land community enables you to own a home you otherwise may not be able to aff꧃ord. There are drawbacks, however, and this type of purchase lacks some of the benefits of traditional homeownership.

How Land Leases Work

With a trained eye, you usually can spot a leased-land property, even when it is not explicitly stated. Keywords to look for include “manufactured home” and “leasehold interest.” Exterior features may include shared amenities, such as an “association pool” or “association tennis courts.” The price of leased property tends to fall below 澳洲幸运5官方开奖结果体彩网:market value for an otherwise similar property.

For example, if the going rate for a traditional three-bedroom, two-bathroom, 1,600-square-foot h🌳ome is around $500,000, then a comparable home on leased land may cost $150,000. A leased property home may also have upscale features for its price.

Steep 澳洲幸运5官方开奖结果体彩网:homeowners association (HOA) fees also indicate that a listing may be for a leased-land property. A normal HOA fee might be around $250 per month, while an HOA fee on a leased-land property might be $900 per month. If you look at a satellite map of the neighborhood where the home is located, the homes may be close together and very similar in style. Finally, in a typical neighborhood, some homes have their own pools, while in a leased-land community, none of the✤m will.

Real estate listings don’t always list leased-land property. Sometimes, key information is left out of a 澳洲幸运5官方开奖结果体彩网:real estate listing because of an agent’s sloppiness or because the agent or seller is trying to hide something. Investigate the hidden facts, and never purchase a leased-land property without thoroughly undꦗerstanding the unusual features of this type of homeownership.

Types of Leased-Land Properties

There are several types of residential leased-land properties, and the most common type varies by region. In Hawaii and Delaware, there are 澳洲幸运5官方开奖结果体彩网:leasehold condos. In areas with Native American reservations, such as Palm Springs, California, you may be able to purchase property on leased reservation land. In Los Angeles, where even homes in the suburbs are high-priced, there are leased-land properties in areas such as Canyon Country. Florida and Arizona have a number of leased-land retirement com🧸munities as well.

Leased-land prope🍬rties 🐎exist in other areas, but because leasing land is an unconventional way to purchase property, this option is not available in every state. Trailer parks, perhaps the most common form of leased-land community, can be found almost anywhere.

When you buy a house or condo on leased land, you’ll take out a mortgage on the property as usual. The monthly mortgage payment will be less because the home’s 澳洲幸运5官方开奖结果体彩网:purchase price is lower, but you’ll also have to pay a significant monthly land lease fee. Because land lease properties often are located in entire communities of similar properties, a leased﷽-land property also may come with HOA fees to cover the upkeep of landscaping, community pools, community buildings, etc.

Special Considerations for Leased Land

If you think that buying a property on leased land may🌼 be righ🌱t for you, you should consider the following:

How Much Time Is Remaining on the Lease?

If the length of the remaini🌊ng lease is less time than you hope to remain in the home, you should inquire about what happens to your interest in the property at the end of the lease term. The lease term also will affect your ability to finance the home. It may be difficult or impossible to get a mortgage if the🔜 remaining lease term on the land is 20 years and you want a 30-year mortgage.

Ideally, a lease that exceeds your potential remaining lifespan will protect your financial interests and your peace of mind. While you may not live in this home for the rest of your life, it’s nice to have that option. And if you sell the home, a long remaining lease term will poꦇsitively affect your sale price.

What Are the Terms of the Surrender Clause?

Check the terms of the surrender clause if the lease will run out while you still own the house. If the lease expires and is not renewed, you will have t꧅o give up use of the land upon which your home is built. Some surrender clauses stipulate that you also must surrender any improvements to the land (i.e., your condo, town house, or house). Avoid ugly surprises by getting the information before you buy.

What Are the Monthly Costs, and Will They Rise?

If there are HO🅺A fees, ask the same questions about those. You want to make sure that you really will 𝔉be saving money by buying a leased-land property, and that you won’t be forced to move one day by escalating costs.

Am I Better Off Renting?

Consider whether owning a home on leased land is preferable to renting. The two are similar in many ways, including the payment of monthly fees that are determined by another party. Owning a traditional home may give you a greater degree of freedom; if that is important to you, it may be worth the wait to save up for a 澳洲幸运5官方开奖结果体彩网:down payment or increase your income enough to qualify for a 🃏good mortgage on a traditi🐈onal home.

Advantages

One big advantageꦜ🍨 to leased land is that you can purchase your home for much less than a traditional home because you don’t have to buy the land. At the same time, leased-land properties may offer better surroundings than apartment living for children and pets, and you can invest the money that leasing saves you.

Leased-land communities often include 澳洲幸运5官方开奖结果体彩网:amenities not always found in traditional neighborhoods, such as clubhouses, pools, tennis courts, playgrounds, a𒆙nd golf courses. Because of the community association aspꦡect, any HOA fees may include having your lawn mowed on a regular basis.

Also, because you don’t own the land, 澳洲幸运5官方开奖结果体彩网:you’ll likely have low or no prope🍸🌌rty taxes, which can take some of the sting out of paying leased land and HOA♛ fees. In some areas, local laws restrict the amount by which leased-land fees can increase annually.

Disadvantages

The most significant downside to owning a home on leased land relates to building equity. For many people, 澳洲幸运5官方开奖结果体彩网:homeownership is a major 🍎source of wealth. With a leased-land property, you risk losing all of your equity at lease expiration, depending on the terms of the surrender clause. The resale of the home is likely to be more difficult than the resale of a traditional home, especially because with each passing year, the rem💦aining term on the lea🦂se shortens.

For this reason, if you want to leave something to your heirs, a home on leased land wil💙l not be nearly as valuable to them as a traditional home.

While traditional homeownership can be a good hedge against 澳洲幸运5官方开奖结果体彩网:inflation, owning a leased-land property is not. When you buy a home with a 澳洲幸运5官方开奖结果体彩网:fixed-rate mortgage, your payment remains t💦he same each year as inflation goes up.

The Bottom Line

Buying a home on leased land can be tempting when you see the competitive list price, but the 🅘purchase involves considerations that traditional home buying does not. Traditional homeownership facilitates financial security for most people, but buying a home on leased land may be a viable alternative for those whose major priority is buying into a particular community at a lower price than a traditional home or condominium rather than building equity.