Land leasing is a type of financial arrangement in which the land or ground under a structure will be leased than sold to a builder or a developer. It means that the structure and the land are owned independently.
There are different reasons why real estate investor enters a land leasing contract, first and most commonly known reason is retaining a piece of the land. In this example, the real estate investor might work with a developer to be able to generate a land lease contract that allows the developer to build a structure and has given the rights to rent or sell it, with of course the understanding that the land is just leased and does not come with the building. This kind of agreement is mostly common in urban areas that are often associated with the tenant-owned or cooperative buildings.
In general, the contract for land leasing will last about 50 years. So, if the contract is in near termination, the land owner must renew it and assure that the building is in good condition or well maintained and has been profitable, even though the price of leasing will possibly increase as the property value increase. In the contract it is also included that the property must be developed in some way and the rents for the land will be paid quarterly or monthly to the property-owner.
One of the great things about leasing is that, if the lease will not expire nor has a longer term, purchasing a structure on a land lease can be a good investment. Why? The building can be cheaper than neighboring real estate because of the unique circumstance.
Leasing a land can be a great investment, just keep in mind on how it will going to benefit you in the long run. If you want to have a good start with your investment, consider leasing land in Thailand.
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