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HOW TO GET A FREE BUILDING – Only Requirement is that You Own an acceptable lot or acreage. We can handle the rest. A ground lease is a kind of lease where the lease agreement is written in such a way that the property’s tenant will be authorized to do all the necessary developments “Place a Steel Building on Your Property” during the lease period usually 5 to 10-years. At the end of the lease the property will be handed over to you the property owner, including the developments ” THE FREE STEEL BUILDING” and any other changes the tenant has made during the lease period. The tenant, who is using the property can have the authority to do any kind of change. However, in the end of the lease, everything goes back to the property owner. The owner ultimately gets the value of all the improvements. This benefits the landlord because they can now dispose off the property at a much higher price due to renovation and changes.
Ground Lease Explained
The ground lease agreement is a typical type of lease in which the piece of land is kept on lease to the tenants, and tenants must make all the necessary changes they want to incorporate during their lease term. Then, at the end of the lease period, the entire property is handed over to the owners, along with all the improvements and developments.
In some aspects, it is beneficial for the tenant and the owner, and in some respects, it is not. Therefore, the parties willing to get themselves indulged in this type of agreement must carefully read and understand all the lease terms and its effects in the future.
A ground lease agreement is generally associated with freehold properties, say a piece of land. In this lease, the tenant who uses the property can make changes and improvements for their benefit, which will be handed over to the landlord with all the improvements and changes made after the lease period.
It is a source of income for the landlords since they are getting improved and renovated piece of land, which they have provided earlier to the tenants. It is also known as economic rent. It has been witnessed that this type of long term ground lease agreement is generally made when the lease period is for a long time, for example, 50-60 years or more.
Types
There are two types of real estate ground lease one is Subordinated and unsubordinated.
1. Subordinated Ground Lease
If the tenant defaults on a loan used to finance upgrades, the landlord in a subordinated ground lease, permits the property deed to serve as collateral. Since the landlord is taking on more risk in a subordinated lease, they generally demand higher rent.
Due to the potential gain in property value from having the building constructed on their land, a landlord may be willing to sign a subordinated ground lease.
2. Unsubordinated Ground Lease
The landlord who contracts via an unsubordinated ground lease retains top priority if there are any claims against the property. This means that even if the tenant defaults on the loan, the lender cannot foreclose on the property.
- The lender in these cases generally requires a personal guarantee that gives them the right to pursue the tenant’s personal assets if they default.
Prospective lenders can be hesitant to extend a mortgage in the case of an unsubordinated ground lease. As a result, landlords typically have to accept a lower rent.
Example
Many big corporations purchase the piece of land in big cities and then push that on lease to the tenant. The tenants, in this case, who are also big brands, come to the owners and finalize one agreement. So the ground lease agreement is done for big property and big businesses.
Mike has received a piece of land on his marriage from his parents, and it was an agricultural land located in some isolated place. Mike is working somewhere in the city, so it was challenging for him to look after the agricultural land. He has decided to put the land on lease for some 10 years and will sit back and enjoy the returns also he will avail the tax benefits from the leased land at the year-end.
Advantages
- The ground lease is a good source of return on investment regarding the property’s owner. The land which the owner gives on a lease will always be appreciated also if it is located in a prime area, then the premium appreciation will be there. The land owner will benefit greatly from this type of lease agreement.
- It helps the tenants from the market fluctuation since the lease payments, and the terms are predefined. The tenants will not have to rethink according to the market condition. The real estate ground lease is somewhat fixed and gets raised according to the agreement, irrespective of the market condition.
- The most significant advantage is that it has a huge tax advantage for both the owner and the tenants. The tenants don’t have to pay taxes on the lease; also, they get the deduction for the rent they are paying. On the other hand, the landowner will not have to pay any property tax in some cases if the property is under Municipal Corporation or very less property tax if it is private.
- It is also beneficial for the financial aspect; the tenants can invest in a piece of land to develop for their business and don’t have to invest money to buy the property, which is very costly.
- In the case of a long term ground lease, the tenants are not required to make any down payments for confirming the deal the way we used to do in purchasing any property. Therefore it has been seen that less equity is involved in the case of a ground lease.
Disadvantages
- The most significant and most prominent disadvantage of the commercial ground lease is that the property owner may have less control regarding the improvements and developments that tenants make.
- Sometimes it is also seen that the tenants are required to seek approvals if they require making any improvements or changes. Therefore, it sometimes becomes a roadblock for the tenants to think of the improvements and necessary changes.
- There can be tax complications because the cost of the land and the indexation may vary at the time of computing tax implication.
Ground Lease Vs Fee Simple
- In commercial ground lease, a rent has to be paid to the lessor, whereas in case of fee simple, no rent is required.
- For ground lease, the ownership rests with the lessor, but in case of fee simple, the party to whom the property is transfers has the full right on it.
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Each RV parking pad shall be a minimum of 20 feet wide by 40 feet long with a minimum five-foot-wide setback on each side, or otherwise able to accommodate both the RV unit and the tow vehicle.
48′ X 45′ X 12′ FOUR UNIT RV COVER STORAGE OR RESORT PARK CARPORT
$16,850
Attention RV Storage, Park, and/or Resort Owners! How much can you increase your revenue offering COVERED parking in your rentals?
This FOUR section unit measures 48′ across in width, 45′ in depth/length, and 12′ leg height. All four 12’x45’x12′ sections are roof only (no gables for center height clearance), and no optional side panels!
Lets break it down:
Lets start with a horizontal A-Frame Style Boxed-Eve roof across the structure. (Anything over 35′ long WILL have a seam!)
12′ x 45′ x 12′ Open Carport with Horizontal Boxed-Eve Roof and both ends open: $4025.00
12′ x 45′ x 12′ Open Carport with Horizontal Boxed-Eve Roof and both ends open: $4025.00
12′ x 45′ x 12′ Open Carport with Horizontal Boxed-Eve Roof and both ends open: $4025.00
12′ x 45′ x 12′ Open Carport with Horizontal Boxed-Eve Roof and both ends open: $4025.00
THREE center connections: $250/each or: $750.00
Total $16,850.00 + tax
(NOTE: Center clearance in 12′ wide with 12′ legs is approx. 13′ 6″ with this 3/12 roof pitch.) 12′ max leg height on 12′ wide.
This configuration can continue in 4 units wide, 6 wide even 10-20 units wide! You choose. Just add $4275.00 + tax per unit added!
As configured, these structures are engineer rated for 140 mph wind load and 35 psf snow load. Can be upgraded wind or snow load as required for additional cost in coastal or mountain regions.
(Prices subject to change at any time or in another locations across the 45 states we service, as well as your local codes or requirements for wind or snow load.)
These can of course be adjusted in size, wider, shorter or taller. (Note: anything longer than 35′ requires a switch to VERTICAL roof structure to be without a seam, and vertical roof structures cannot be connected together in the center valleys like this.)
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