The advantages of a land lease:
Land-leasing is a form of home ownership that reduces the capital costs of buying a house. By going this route, residents buy their home and own it outright and lease the land. As a result, the purchase price is often reduced because you’re not buying the land. The savings on the cost of the land may allow you to buy a more expensive home. These homes are typically part of a homeowners association, which provides common services and facilities.
The disadvantages of a land lease
Finding a lender for a land lease can be problematic. In an HOA, residents may share in the cost of leasing the land, so you might have to pay significant fees as part of your lease. The cost of leasing the land can increase each time your lease is renewed.
Unlike traditional homeowners, you’ll build equity only on your home, not the land. Selling a home on leased land may be difficult.
What to consider:
Pay special attention to the terms of the lease, additional costs such as HOA fees, and the length of the lease. If you plan to live in the home past the end of the lease, make sure that option exists.
Buying a home through a land lease contract can be an attractive option in light of the lower purchase price. However, it’s essential you consider all options and obtain advice from professionals who are knowledgeable about land lease agreements
Find more information regarding financing for Land-Lease properties, contact Terry Lynch
416-315-17878,
terrylynch@rogers.com
