Investment Land Feasability
- Land Location |
- How to Buy Land |
- Land Features |
- Investment Timing |
- Opportunity Costs |
- Community Acceptance |
- Single Lot Investments |
- Residential Lots |
- Speculative Lots |
- Lease vs. Resale |
- Building to Suit |
- Acreage |
- Acreage for Resale |
- Land Evaluation |
- Land Promotions |
- Land Bankers
Lease vs. Resale
It is important for investors who purchase building plots for sale to carefully evaluate their personal financial positions before actually selling. In fact, it may be more advantageous to lease, rather than sell, the property.
A lease develops certain advantages for both the landowner and the tenant. The owner benefits by securing an income stream into the future. In addition, at the expiration of the lease, the reversionary rights to the Plot Sales are retained, as well as any improvements made thereon by the tenant.
Long-term land leases also provide the landowner with an asset-the lease-that can be capitalized on. By pledging the lease as collateral, the landlord can secure cash from a lender- tax-free cash that can be used to purchase additional investments. Thus, the landlord continues to own the leased land and can expand the investment portfo- lio accordingly.
The primary benefit to a land-leasing tenant is leverage: the leasehold interest acquired under a long-term land lease can be pledged as collateral for a mortgage to construct a new building.
With a loan sufficient to pay for the costs of construction, the developer may be able to leverage 100 percent and avoid investing personal funds in a project. In addition, the rent paid by the tenant for the use of the land is considered an operating expense in the year that it is incurred.
Thus, by paying rent on land rather than owning it, a tenant is effectively gaining the benefits of "depreciating" the land over the life of the lease. Remember that plot sales is not specifically depreciable.
- Land Location |
- How to Buy Land |
- Land Features |
- Investment Timing |
- Opportunity Costs |
- Community Acceptance |
- Single Lot Investments |
- Residential Lots |
- Speculative Lots |
- Lease vs. Resale |
- Building to Suit |
- Acreage |
- Acreage for Resale |
- Land Evaluation |
- Land Promotions |
- Land Bankers
