Land Leasehold Interest Investing

[Landon Kohlrusch]

Wondering if anyone has any experience investing in houses where there is a Land Leasehold Interest? I was looking at a STR investment property and just found out that it is in a Land Leasehold Interest area. Wondering what the Pros and/or Cons are with this strategy.

Thanks!

[Michael Baum]

Hey @Landon Kohlrusch. When we were searching for our north Idaho lake house, there were quite a few USFS lease land places for sale. The advantage is the price is quite low compared to owning the land.

The biggest drawback is the lease can be pulled pretty much anytime. The majority of the lake front property on Priest Lake in north Idaho was lease hold land. Most were 100 year leases etc. Slowly the USFS started to void the leases and then offer up the home with the land for sale. People who owned their cabins for 40 years found themselves having to bid to keep them. Most of the properties went far above what most of those folks could afford. 1 million plus in some cases.

So, things can work if you make the money first but be ready to lose the "investment". What you are really doing is working the land to make the money, hoping you will make back your purchase price and then profit in the longer run. It is hard to consider it an investment as you don't really own anything but the structure.