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Regarding Real Estate On Leased Land

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1.Why are there so many properties on leased land?

There are several situations here. Business and commercial land is often leased all over the world. In New York City, Tokyo, and other larger, older cities; land owners often lease the land that is underneath those skyscrapers and in some cases even the park land is leased to the city by the land owners.

In Lewes, all of the land east of the Lewes and Rehoboth Canal, what is known as Lewes Beach; is leased land. The land leases there are usually owned by the Town of Lewes and are usually for 99 years and renewable. Some of the properties on Lewes Beach, however, are leased for shorter terms by the town, but as a rule all of these are automatically renewable. When you buy a property on Lewes Beach you pay a fee to get the leased land re-assigned to you. That fee for a Bay Front Property, on the Delaware Bay; can be well over a half million dollars, depending on the size of the lot; and the value of the home and improvements is added to the lease assignment value. In other words, even though it is leased land on Lewes Beach; the price is commensurate with purchasing the land. This land has always been leased land as prescribed by England, during our American Colonial Period and that ownership style remains.

In Rehoboth and Dewey Beach areas, is the Rehoboth By The Sea area, a large number of the lots are owned by the family owned Rehoboth By The Sea Realty Company. The current treasurer of Rehoboth By The Sea Realty Company is Jack Redefer; 302-227-4277. Land is leased to the tenant-owners for shorter periods of years; some leases have as little as 20 years left on the lease. These leases may or may not be renewed and the land value if the resident is allowed to purchase it later, could be significant. As a result these properties on leased land go for much less money that the lots that are owned. Some of the lots have been purchased from the Rehoboth By The Sea Realty Company in the past and are owned by the residents - most have not been purchased. Rehoboth By The Sea Realty Company will not likely renew some of the leases, some they may, it is up to them. On the lots that they do not renew the leases for - the residents are required to remove the improvements and leave the land in it's original level and unimproved condition at the end of the lease. The good news is that you can save as much as half a million dollars when you purchase a home on some of these lots. The bad news of course is that you may have to remove the home and vacate the lot in a couple of decades or so.

Long Neck and other areas where there are trailers, manufactured homes, single wides, or double wides also are comprised of mostly leased land. There is some leased land along Rt. One, where trailer parks now, at times, contain larger and more conventional homes as well. These land-lease communities are far less expensive to purchase. The appreciation in value is small or nonexistent - or in some cases the value of a property purchased on these leased-land communities can depreciate to far less than the purchase price. There is also a monthly or annual lease fee to pay for the use of the land.

2.Why would anyone purchase a mobile home or manufactured home on leased land?

There are many, Realtors included, who wonder why in the world anyone would ever purchase a so called mobile home on leased land. Actually many of the folks who live in the leased land communities are well to do, even wealthy in some cases, many are Realtors themselves.

Safety and security is one reason. Many of the folks in land lease communities, which some might call trailer parks, are retired or part time residents. There are many who prefer the security services which are only available in the manufactured home communities. Most of these communities have community centers, neighborhood watches, security patrols, and alert neighbors who keep a far better eye on the community than the police force can in a town or city.

Low maintenance is another reason people, in fact most people, live in land lease communities. The lots are usually quite small and often the park owner maintains each of the lots. When the individual does need to maintain their individual lot the grass cutting expense is minimal. The fee for cutting the grass, edging and trimming can be as little as $8 each time, as the grass cutter can often take care of a lot in less than ten minutes and if he has several lots in the same community he can do 5 or 6 lots per hour with a push mower and a weed whacker. Some folks do fabulous landscaping jobs on their land-lease community lots. In fact some communities have annual or seasonal competitions for the best kept, most beautiful, or most improved yard. Many of these lots are only 50 feet by 100 feet, sometimes less - so a lot of beautification can be done with limited expense compared to the far larger lots that one must have in a non leased community.

3.Are homes on leased land a good investment?

Very seldom are homes on leased land a good financial investment. There are exceptions. The homes on the leased land on Lewes Beach are just as good as financial investments as the homes on what is called in-fee or deeded land in Lewes town proper. In fact, since the Lewes Beach is more desirable to more people - the prices are higher and the percentage of appreciation on Lewes Beach is, over the long term, better than those in Lewes proper. The town of Lewes, other than the beach, is more of a Williamsburg flavor in architecture, ambiance and character. Lewes Beach on the other hand is less traditional in it's architectural character. The town of Lewes is very much a walking and shopping town with shops, boutiques, and little stores along Market Street, Second Street and Pilottown Road, especially. The beach has very little commercial activity and is far more a beachy bedroom community where the focus is of course the beach, the canal and the bay.

Homes, manufactured homes or stick-built homes on the other land lease communities are not often a good financial investment. However they may be the best investment in lifestyle. Many folks have other real estate, other investments, and do not need to have the home they own in a land-lease community appreciate in value. And, the homes in the land lease communities are a small fraction of the purchase price that they would be if the land were deeded, in-fee.

For instance, a waterfront home on the Rehoboth Bay in Rehoboth Bay Mobile Home Community; now known simply as Rehoboth Bay Community; may cost as little as $115,000, for a beautiful, double wide, full time, modern home. The land rent would then be from $400 a month on a lagoon to $500, up to $750 a month or more on the largest and best bay front lots. Compared to a home on deeded land the same size that is a savings of over a million dollars!!! So, as an investment in lifestyle it is phenomenal and astute buyers seldom allow these homes to sit on the market.

Other areas, for instance the Angola Area are, have resale homes from $10,000 for a small fixer-upper on a small lot leased at $270 a month to brand new homes on much larger lots, large homes, for $70,000 to $90,000 on lots that rent for usually less than $300 per month. One double size corner lot rents for $400 a month and could have a many bedroom home with decks, porches, garage and still room left over. Angola Beach Estates and Angola Beach and Angola Estates are well established communities with pools, security, substantial community management and lots more. They have community centers, boat docks, launching ramps, boat storage areas, and a list of amenities not available in many other communities.

What a range of values: resales from $10,000 to $80,000 and new homes from $40,000 to $80,000 or $90,000 for a real show stopping extravaganza. Now you know why people are so willing to buy and live in land lease communities!!! You get a wonderful lifestyle for far less than you can purchase anything even remotely similar where you don't lease or rent the land.

Copyright 2002-2005 by

Mr Jody Hudson is a realtor living in southern Delaware with 35 years dealing with real estate on leased lands!

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