Spotlight: Understanding lease land
Updated: Sep 21, 2018
Eliminating the mystery behind leased land.
The Palm Springs and Coachella Valley area is a checker board of leased land and fee simple land (land that you own). Lease land consists primarily of tribal land owned by the local Agua Caliente Indian tribe and is leased to build upon for residential and commercial use. Residential land generally has a lease payment made monthly or annually, with a stated "expiration date" of the land lease. In many cases, these land leases can be extended (or have already been) extended for a period of 25-30 years.
“Lease land homes are generally larger and cost less than fee simple homes, because you are not purchasing the land underneath the residence.”
When you purchase a "Fee Simple" property (Condo or House) you must purchase both the structure and the land. With a leased property, you pay a pre-determined monthly payment to lease the land, and you only purchase the structure. You do pay property taxes, just like on fee land property, however the assessment is still based on 1.25% of what you paid for the purchase. Lease land homes are generally larger and cost less than fee simple homes, because you are not purchasing the land underneath the residence.
Can I get a loan on a lease land home?
Yes! You need to use a LOCAL lender, but it can be done. There are some rules of "thumb" to discuss with your Realtor, and you can generally get 15, 20 and 30 year loans on your new home with 10% or 20% down depending upon the circumstances.
Can I get an FHA or VA loan on leased land property? No. You must get a conventional loan.