Ground leasing for residential

[Casey Penland]

I wanted to get some people’s thoughts on ground leasing for single family residential homes?

I know ground leasing works well on the commercial side of real estate but I haven’t really seen it on the residential side which is probably because it doesn’t work.

However, could this be an opportunity to make buying a home more affordable? What if there was a private company out there that partnered with first time homebuyers or homeowners to make their home more affordable initially. In doing so, they separate the home and the land as different investments. Allowing for the homebuyer to purchase the home and the private company purchases the land. They have a unique contractual agreement in place where the tenant (homeowner or buyer) pays rent on the land. In doing so, they have reduced their mortgage each month, reduced the down payment, save on total interest paid, and several other payments also.

I know there are several other things that would need to fall into place here like if a lender would lend on something like this, what if the tenant defaults on payments, how long should the contract be, would happens if the tenant wants to sell, etc...

However, could this work. Why or why not? Would love to hear your thoughts