Do you need cash flow, but you’re not ready to sell your land? A Ground Lease may be the perfect option for you!
What’s a Ground Lease?
- It’s a way for commercial property owners to maintain ownership of their land while still monetizing their property
- It’s a way for commercial developers to acquire temporary rights to land that they may otherwise not be able to develop
The most common way for a landowner to generate cash from a parcel of land is to sell it. But many landowners would prefer to hold onto their land and let it accumulate value. Since that value can be substantially higher with improvements, some landowners find it desirable to lease the land to a developer.
Most developers would prefer to own the land beneath their development. But since most land in high-profile locations is already owned, it can be difficult to find prime real estate on which to build. A Ground Lease enables developers to borrow prime land for their development.
How Does a Ground Lease Work?
- A landowner leases land to a developer, usually for a period between 10 and 99 years.
- The developer is free to vertically develop the land with improvements.
- During the lease period, the developer owns all improvements but not the land itself.
- At the termination of the lease period, the vertical developments become the property of the landowner.
The benefits of a Ground Lease for landowners are clear. They benefit by:
- Holding onto ownership of their land
- Improving the value of their land through vertical development
- Generating cash flow during the period of the lease
Developers also often benefit from a Ground Lease. For example, they benefit by:
- Being able to afford a more desirable, high-traffic location than they could afford
- Being able to build on a piece of land the owner is unwilling to sell
- Spreading the cost of the land out over a period of lease payments rather than paying all at once or mortgaging the purchase
At Asking Price Realty we’re the real estate investment experts, and TripleNetInvesting.com is the exclusive home of our commercial real estate division. Our experienced agents at TripleNetInvesting.com know everything there is to know about Ground Leases. Whether you’re a buyer or a seller, contact us today. Whatever your real estate needs, our extensive network of real estate experts can help you achieve your goals.