leasehold - Posted by Mary (CA)

Posted by Mary (CA) on September 06, 2007 at 12:55:07:

Thanks for the comments. I wish this were as long - only 18 years, but oceanfront, so was thinking about vacation rental. Hm, a quandary.

Know anything about the vacation rental market? I’ve researched prices and they’re all over - from $30 a night to $10,000 per night. (the higher end being obvious, the variations in the middle and low end, not so.)


leasehold - Posted by Mary (CA)

Posted by Mary (CA) on September 04, 2007 at 22:03:36:

Hi all,

I was curious if any of you have considered buying a leasehold interest (buying only improvements for length of lease on land). Dolf de Roos talked about one he purchased in NZ/Australia - but other than mentioning that it caught his attention because it was too cheap for area, he gave no details.

What issues, other than obvious ones, should I be concerned with?

So far . . .

financing available for lease term minus 5 yrs
203k apparently not available
fv(end of lease) = -0-

Thanks for your thoughts,


Re: leasehold - Posted by LH

Posted by LH on September 04, 2007 at 23:49:57:

Made profit $377,000 in pocket with 3 condo sales in Hawaii which were leasehold. Lease term had 53 years left so conventional financing was available (2000/2001) Rate was slightly higher. Some banks would not lend to it. Lease had several renegotiation periods at which the monthly lease rent could rise or drop (yah, right); typically, in HI, the LR goes up, sometimes as much as 500%. Yes, nuts. My condos were on a sub-lease which was bought out and an assessment made to condo owners just to buy out the sub-lease. Think it was minimal like $500 per unit. Rule of thumb there is that when the property is within 10 years of reneg on the lease rent, the harder it becomes to sell as one does not know how much it will rise. also, if the property was inside of 35 years to lease termination, financing becomes exponentially harder to find from conv lenders. was comfortable with the building and the association so i bought several. the leasehold docs had a lease schedule which listed automatic, pre-agreed upon increase between the reneg periods. guess what i am saying is LH can be great if the LH term is very long and the first LR reneg is 10 years or so out from when you buy. i got very lucky with the market – bought LH as the price was generally lower because people fear what they do not understand (LH, for example.) bought for rental income and then the market went absolutely nuts and i sold late 2005 early 2006.