I own some land. What are the benefits of leasing out the land rather than selling the land?

Question

I own several acres of land. A business man wants to buy 100 feet by 100 of prime frountal land and build a mini mall on what he owns and my 100 feet. Would it be better to lease out the 100 feet by 100 feet, or to sell the land?

Answer 1

Land Lease is the way to go. Many strip malls are built using Land Lease contracts.



They will build the builing to suit their needs and you receive rent payments for the remainder of the lease. Very simple and very profitable. Especially if you own the land outright.



Make sure you use a percentage rent, which is very common for Land Lease. Meaing that you charge a lesser base rent, but you will get a portion of the gross rent after a certain number.



The advantage of that scheme is this: As the price for goods/services go up every year to keep up with inflation, the gross revenue goes up. Meaning that every year, your rental income increases potentially.



Here is another one I came across.... Land lease the entire land (if it is prime land) to a developer. The developer will build out the mall and rent it out. Then, the developer charges extra percentage (1-2%) of the monthly base rent for payment to the landlord (you).



This way, the developer builds out the land, which you still own, then the developer makes money by charging rent and managing the property. Then, you still get paid due to the 1-2% of the base rent that is charged to all the tenants. Employ the percentage rent to this, and you have a gold mine..



Good luck!

Answer 2

In my opinion, Lease it. This will allow you to keep the remainder of your land as part of what is obviously valuable commercial frontage without lowering the value of the remainder which could happen if you did a lot line adjustment sale to the business man.

Buena Suerte

Answer 3

Leasing may allow you to retain some control and receive an ongoing payment.

Answer 4

Lease it. Make sure they carry insurance for your property.