Solving the Mystery of Land Lease Communities - How do they Work?
The decision to buy a home -- whether it's as a first-time buyer, it's time to downsize, or make a move to a retirement community -- is always a big one. The decision can be stressful, making a move is physically exhausting and emotionally draining. There are options, however, that can save money, time and offer long term benefits.
Although traditional home ownership usually includes a single deed for both the house and the lot, a budget-worthy option can be to buy a home without actually owning the land that it occupies. It can be a way to maximize your housing dollars and reap lifestyle benefits.
More House, Less Upkeep
Communities that feature land leases typically include an abundance of amenities, with heavy maintenance and upkeep of the land falling under the domain of the landowner. That can be a distinct advantage, freeing buyers from concern over escalating taxes and major repair assessments. Land lease ownership can be structured in a variety of ways, but the essential fact is that by not having to pay for the land upfront or in a mortgage, buyers can usually afford more house with lower monthly costs.
If that sounds appealing, also consider these additional benefits:
Community standards are defined and generally assured; a professional firm with an onsite manager assures compliance and enforcement of those standards.
Cost increases are more predictable; property taxes can be extremely low or even non-existent, but residential land lease terms and regulation vary by state and specific locale.
Landscaping, tree trimming, street repairs, major utility costs and common amenities fall under the responsibility of the landowner, developer or management company. An annually set fee is paid on a monthly basis to cover those costs and lease the land.
Individual homeowners retain control and are responsible for the maintenance over the use of their own homes, but have no responsibilities for the overall operation of the community. The feeling of community is often enhanced in a private community.
Land lease communities offer distinct advantages, but if you're considering such a purchase, there are many things that will affect your decision, including the quality of the community, your ability to sell the home or transfer ownership to another person, inheritance considerations, and even the subject of home value, and whether you can expect it to appreciate over time. Ask your land lease representative how these items work.
Buying property, represents a major financial commitment, and the decision should be made only after careful consideration of the pros and cons. A lower-price buy-in to a desirable community may tip the scales.
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Can the land lease be part of the mortgage.