Apartment Complex With Land Lease
We are looking into purchasing a 40 unit building with a leasehold arrangement on the land. It has about 80 years left on a 99 year lease. What do you need to look out for in this type of deal. Also, how hard is it to finance something of this?
We own several other properties, but dont have any experience in this type of deal and could use some input.
Thanks, Matt
I cannot see why a lender would have a problem with this because the absolute longest loan they would give you is 40 years and then they would be out of the picture. If the numbers are where they should be, then it should be a non issue with the lender.
Thanks for the replies. Is it still considered a real estate loan then, and not a business loan, if there is no land? The bank we normally use doesnt do these type of loans and we will have to shop elsewhere.
Monica, great book, just finished reading it the other night. Everyone should get a copy of it and take a look.
Thanks, Matt
you pledge you interest in the ground lease.
It is a RE loan.
Thanks for the replies. My brother just told me that about Hawaii. In ten years I would hope to be out of it anyway.
The whole concept of the land lease was just new to me. I am still having a hard time thinking about not owning the dirt, though.
Thanks, Matt
Matt, for your purposes think of it as a condo.
CJ, what did you do with your property when your lease ran out? Did you walk away? Were you obligated to remove the improvements from the land? Did you sell the improvements to the land owner? I assume your interest in this property was for 5 years of cash flow.