quote:
Originally posted by Greg
My impression of "leasehold" is that you pay for structures and improvements on the property plus a small yearly payment to the state. If you sell your lease, you are compensated for the improvements and structures, plus any new ones made.
Leases are not alike but when you buy a leasehold property your purchase is worth less and less every day, up to the date of the expiration date of the lease when your purchase becomes worthless. (You are free to pack up your house and leave.)[
]
There usually are renegotiation dates in the lease and that's usually for every ten years. While your lease might be good for 30 years, your lease payments will change every ten years. The renegotiation method usually is based on appraisal but has a minimum guaranteed return for the land owner. If you want to sell your leasehold property you have to get a consent from the landowner.
Please note that banks don't loan on leasehold properties for more than 10 years minus the lease. (Ie., if your remaining lease is 30 years than you can get a 20 year loan.)
Again, leases are different, and can give you a shock at the first renegotiation date. (In one case that I know of in Kona the monthly $85 lease payment jumped to $400 at the first renegotiation!) Make sure you are represented by a real estate agent who knows about leases and can explain what you are buying, or better yet, hire an attorney.
I am not saying leasehold properties are bad, I used to own a leasehold condo.
Aloha,
John S. Rabi, GM,ARB,BFT,CM,CBR,FHS,PB,RB
808.989.1314
http://www.JohnRabi.com
Typically Tropical Properties
"The Next Level of Service!"
