To Fee or Not to Fee

[Ryan Taylor]

Question for the people in the room that are smarter than me.

I haven't seen this topic come up, or I have just missed it. When it comes to STR's and the numbers work (CoC, Cap rate, etc.) but the property is Lease Hold vs. Fee Simple, would you still move forward as a prospect. Have you come across any issues when trying to, later on down the road, sell said property if acquired. Are LH properties less desirable due to the lease payments, even though the "numbers" work?

If you are ok with LH, are you underwriting it the same way as a fee simple, just factoring in the lease portion of the payment as an expense to make sure you are still achieving your Cap rate.

I know that LH and FS are just ways that you "own" the property, Fee Simple being the highest form of ownership, Lease Hold not owning the land, but wasn't sure if it mattered how you own the property as long as the "numbers" worked. To me it would...am I wrong...

What say you??