land lease buildings

It depends on term of the lease to start with. Does the building have 99 years left on the lease or 31 years? One isn't a deal breaker, the other is a potential disaster.

Let's say there're 90 years left on the lease. At the end you own nothing, so take the purchase price, divide by 90, and that's the cost per year. (In reality, that diminution is on a curve rather than a straight line, because value will drop more per year the closer you get to the end.)

Add on the yearly maintenance. There's your yearly nut, subject to the normal increases in maintenance.

Terms of land leases vary quite a bit. Typically, though, the payment resets every x number of years, and is determined by a third-party appraisal of the unimproved value of the land.

If considering a land-lease co-op, it's worth putting lots of hours into spreadsheet work to compare the numbers. You want to be sure the diminishing value of the asset is fully reflected in the price you pay.

"If considering a land-lease co-op, it's worth putting lots of hours into spreadsheet work to compare the numbers."

Or you could save that time and just not buy a land lease building. Besides, many banks won't even lend to buy in a land-lease building. And if you do buy, no spreadheet is going to predict the value of the apt. 10 years from now. If your ely on a spreadheet, that is a recipe for disaster.

True, it's easiest to just not consider it at all.

But, everything has its price. If that price is low enough, you can play off other people's aversion to that situation to save some money. It'd be sort of like paying key money to get a rent-stabilized lease. Just a question of how much it's worth.

In NYC, the land lease buildings that I know (with the exception of 995 Fifth) have less than 100 years, so don't go there. In London, there are a quite a few land lease buildings and they are all very long term leases AND there is a law that makes it easy for existing land lease properties to buy the freehold for a reasonable rate.

So the bottom line is don't go for land lease in NYC.c

it's also important to note that the land lease buidlings in Battery Park City work on an entire different principle so there is nothing wrong with buying there.

What's a land lease building?

How is it different in BPC?

30yrs_RE_20_in_REO: In a land lease building, the building doesn't actually own the land underneath it - it rents it. So in theory, the land's owner could deny a renewal (or significantly jack up the price) forcing the building to shutter.

The new Chelsea Enclave is an example - it has a 99 year land lease from the Seminary.

I've long wondered if the coop that owned the building would be required to remove it in the event of nonrenewal; if that would be enforceable; if the landowner is entitled to take possession of the building in the event of abandonment due to nonrenewal; if they could evict holdovers.

Chilling.

racer -- 30yrs was being sarcastic -- he's a regular SE poster and as close to a RE expert as you will find here

Can anyone explain why it is different in BPC the land lease situation

Any difference with BPC is tied to who actually owns the land, which has not been brought up. Unlike BPC, it may not necessarily be a government sponsored entity.

racerdave, 30years (who I work with) is kidding. For Heaven's sake.

Nina, BPC is considered "different" because the entity that owns the land is the Battery Park City Authority, which is a quasi-governmental (right?) entity .. unlike a private entity, it's extremely unlikely that the BPCA wouldn't renew a land-lease.

In fact right now I believe some local government reps are trying to negotiate rollbacks on one or two of the existing land leases down there.

ali r.
[downtown broker}

thank you ali

Haha. Sorry, new here. If you are new, it looks like a totally legit question. No wink or anything to indicate a joke - but I'm *guessing* this is one of those "been asked a million times" things here....

Does it give the buyer some confidence on the co-op if he/she got the bank pre-approval on a 30-Y mortgage?

Slee, I'm not sure I understand your question. Does it give the buyer confidence in what sense? That a bank pre-approved the buyer for a 30yr mort. in a specific building? A general "pre-approval" letter means almost nothing in terms of whether a bank would issue a mortgage to the buyer for any particular property. It's just a general statement that this buyer was not deemed an automatic "no-way-no-how-for-anything" by the bank. Pre-approval doesn't commit a bank to anything.

w34: close? Close? jeeze ..... being certified by the Federal Government doesn't mean anything around here anymore..... (j/k)

Thanks Kylewest.

The bank gives the prospetive buyer the pre-approval on a specific land-lease co-op. From what I am reading from all these SE threads is that it is OK to go into land-lease building if
1. the price of the unit is cheap enough
2. the land lease is stable and long term
3. the buyer can secure financing from the bank.

Do you all agree?

i can share my experience... i applied for a mortgage last november for a building on a land-lease. at first there is a gasp but within 24 hours everyone i spoke with was ok with it. i should add it is in BPC...
hope that was helpful (???)

Slee what do you condider "cheap" enough how much should a land lease condo be cheaper from a regular condo in the same neighborhood?

"i can share my experience... i applied for a mortgage last november for a building on a land-lease. at first there is a gasp but within 24 hours everyone i spoke with was ok with it. i should add it is in BPC...
hope that was helpful (???)"

I don't think this "counts" in the sense that the gasp may have been an honest one, and that they don't lend in Land Lease Buildings, until they realized that in the situation of BPC, it was a CONDO not a COOP and that it was a special situation where ALL the buildings are land lease, but to a quasi-governmental agency. Had it been a "normal" land ;lease Coop to a private party (the land lease), that gasp might have continued.

Right now between the properties I am looking at, the land-lease co-op is at a 20% discount to freehold co-ops.

Any comment on buying a 2 Tudor City Place coop that has reportedly a "99 yr land lease'?

In all of Manhattan, with all the possible alternatives (both condo and co-op) I see no real reason to be involved in a land lease situation. I see no compelling upside. In that area of Manhattan alone, if one is patient, I can't believe you couldn't find something to your liking where that exigency is unnecessary....

uh...the reason is you get way more for your money, particularly on bigger apartments.

RE BPC:
In 1970 there was no Land where BPC was built. Now there are "land lease" buildings. Do your research on that phenomenon and you'll have a a PHD in NY "real estate".

Bonus question:
Who is Larry Silverstein's Landlord and why would a renter be entitled to receive insurance bounty from real property he didn't own?

Newyorkgirl - Just walk away.
The only thing more retarded than buying into a large Coop is buying into one sitting on a land lease.

>Bonus question:
Who is Larry Silverstein's Landlord

seriously, that's the best "bonus" question you can ask us? Since the topic is nearly front page news in the past 9.5 years?

Does anyone know which banks lend to land lease buildings in NYC?

Is there a way to tell if a listing is in a land lease building? i don't see that screen on street easy's search and it'd be so much simpler. At this point I am about to ignore all condops because they keep turning out to be land leases.

I also have access to property shark so if there is any way to tell on here or there, please let me know.

Look up the building on ACRIS. Get the co-op's name from a recent UCC1. Search on that name.

If there's a mortgage document under the co-op's name, the first few paragraphs will say whether the co-op has only a leasehold interest in the land. If it does, you won't see a deed from the sponsor to the co-op, but you might see a Memorandum of Lease.

Or ask a lender to look up the co-op for you. They all work from the same database showing whether it's a land-lease, etc.

Or, if the price seems very low for the building and neighborhood -- i.e. if you've been bottom-trawling the listings -- then there's a reason. The reason may well be that you're buying only a share of x-year's use of the building, and not buying any share of the land. If you hold that it's always better to rent than to buy, then you'd be half-way home.

A report from that co-op database is at http://worldonefinancial.com/wp-content/uploads/2012/04/Coop-Buildings.pdf.

"Look up the building on ACRIS. Get the co-op's name from a recent UCC1. Search on that name"

Can you give an example of what the coop building name would show up as? Are we looking for the address of the building?

Then, how do you search on the name?

I've perused the ACRIS site and am able to locate the building I'm interested in but am unsure how to do what you said.