Land Leases?
Does anyone know how a typical Commercial land lease is structured? Does the land owner get a percent of the gross? or a flat price per sq ft/acre?I know this is not really specific, but I'm just trying to get a general idea.
Thanks
I know of two kinds of LAND leases.
The "corner of "main and main"" ( in otherword drop dead location) will lease at, say 8% a year, 20 years, with escalators in the land value. The property reverts to owner or gets a big bump. ( Most commerical buildings have 20 year useful life.)
The other is a long term ( 99 yrs) with a renewal option.
With interest rates so low right now, land leases are not popular. Most landlords will not subordinate for a construction loan either.
[addsig]
On a long term land lease, there is no need for subordination. All that you do is borrow for construction or to buy the house that is already on the land.
Take a look at England most of the goody stuff re: land is either Crown or Church. They own it and lease it out. They never sell the land. I have a house in Saffron Walden and when I purchased it during WWII the land lease was about to expire, had only been on for 99 years. So I made the Crown an offer they could not refuse. In considertion of their extending the lease for another 99 years, I Lucius Foster would install real live american style plumbing in MY house. If they refused, I would resign from the RAF and transfer at once to the Luftwaffe and they would probably lose the war. They fell all over themselves. They did not even make me sign an agreement to do the repairs. All of this done in a gentlemens club over the worlds worst lunch. However the thatch roof while recently done still has little animals that run around all night. I hate to poison them, besides the tenants love them.
It is my intention to import this leasehold method and utilize it with the following change.
My Estate will own the land. There will be a lease of 50 years to Properties Unlimited. They will erect, you really cannot say build a lovely double winged house made from ISO Containers all metal. They will then sell the house with a Trust Deed on it which is all due in 30 years. The new owner will pay on the house for 30 years and then have 20 more years of just paying the small lease amount. I like it, makes all the partners rich and I get a gold star on my new wings.
Gooddeeder Lucius [ Edited by Lufos on Date 12/20/2003 ]
I just love that reply of Lucius! Best things I've read all day.
What would be a typical amount paid for a 99 year land lease with a major retailer like Walmart? Thanks to everyone for the info.