Ground Leases Explained
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- čas přidán 21. 08. 2024
- Ground Leases Explained // Once you've been underwriting commercial real estate properties for a while, you're bound to run into a unique deal structure called a ground lease. And ground leases can be tricky (and somewhat difficult to understand), so in this video, we're going to break down what a ground lease is in real estate investing, and what to look out for as a commercial real estate investor when analyzing a real estate investment with a ground lease component.
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Thanks for the videos. Question. As a lessee to a ground leased house who pays the property taxes?
Also, I may be looking into your courses, thanks a bunch!
This guy is great I highly suggest his content. On Udemy I believe each course is around $30 bucks well worth it.
Very helpful. Thank you
Glad it helped!
HI Justin, thanks for your videos! Question, is a ground lease treated like debt? ( e.g. Below the NOI) or is it an operating expenses? (e.g Above the NOI)
Consider I have a piece of land with a groundlease. Is there a simple way to calculate how to value it if I wanted to sell?
What vacancy factor do you carry for a land lease or Triple net single tenant space in a proforma?
This was great information. Just a question, I entered into a ground lease where a home was already built by another lesse. However, I'm now the new lease. The lease that built the home is in range and is asking questions. Does the lease have any right to the house he built? Should I be concerned with this, or this is not my fight?
Thank you in advance
What if I buy a nnn property on the ground lease, what happened to the building( who has the ownership of the building) property at the end of ground lease?
Could you please explain this?
Thanks
he explain 2:45 - 3:10
land owner takes all
If you buy a ground lease that is leased by National tenant what happens at the end of lease? How can you potentially lose when the lease is over? Thanks
I want to lease my land for wind turbine. Can your class help with having a better understanding of this process?
Thank you for your knowledge, I have to ask, what is the name of the art behind you... just pay attention to detail.
When does financing a ground lease become problematic? I am part landowner in something that has 34 years left...
For you nothing you are the landowner you can either sell or raise the rents or kick everyone off the land and keep what’s built on the land for yourself but you then will be responsible for the property taxes at the assessed value.
*HELP* if you’re considering taking a buyout on estate property, and some of the properties (land) have been leased for 99years do you add the value of the leased lands to get an accurate estimate for the buyout?
Now after all that has been said, would it be more profitable for a (vacant) land owner to rent to a farmer for cattle grazing or to an oil company who is wealthy to prevent a maximum amount of damage to the ground? Or would it be profitable to lease to BOTH??
Hi, I really enjoyed your intro video. This information was priceless and sparked my interest! Can you provide some examples ie case studies for a few ground leases for example for businesses like (McDonalds, 7-11, Burger King) etc in terms of putting a package together, determining the lease price and negotiating for an extended terms for the lease. I like to see what a ground lease package consist of from start to finish. Can you do something like this?
Look up trump tower ground lease and trump plaza
Ground leases are really popular in New York City start there
A lot of people have questions here that they should really talk to their lawyers about. Without seeing the lease there is no way to give you answers. This video is a great introduction but it is just an introduction.
Hello Justin - currently working on selling a deal that has a 30-40 year ground lease. From a modeling perspective I don't think there would be much change if we are modeling out 10 years of cash flows correct? with basic assumptions.. as the lease would still be in place.. It would really be on the buyer to determine their exit and hold period correct? Would there be an instance to use DCF? not sure if that makes sense for this scenario.
Shouldn't be much change, other than adding in the ground lease payment. Yup, on the buyer to determine their exit and hold period, but it will usually be 5-10 years for most. Buyers will likely assume a higher exit cap in their analysis of a ground lease deal (since the risk of having to hand the improvements back to the landowner increases as the lease expiration nears). I would think a deal with a ground lease with 30-40 years left on it should see a little bit of a discount from a cap rate perspective, but not huge.
Great video btw. I am looking to invest in a ground lease deal signed for 20yrs with 3 5yr options that has 13yrs left on the initial deal with a 9%cap. Should I be hesitant about purchasing due to the fewer number of years left on the lease? The tenant is part of a major jewellery chain, if they were to leave after the lease period, Would I have issues leasing/selling the building?
The ground lease term is what I'd worry about most. If it's a good location, the lease term of the tenant is definitely something you want to be aware of, but the risk of losing the building back to the landowner is the biggest risk in my opinion.
Great video!
Thanks for watching!
@@BreakIntoCRE I have a quick question. I'm working as a full-time appraiser trainee and taking real estate courses to get my license (on Income 1 & 2 at the moment). My question is, how would these courses (18 videos) fit into my current schedule?
Thanks!
@@xTheMythTheLegendx Great question - these courses are on average about 6 hours, with most of the modeling courses having a big hands-on component, meaning it will take you longer to get through them. If you can set aside either an hour a night or a block of time every weekend (maybe 3 hours on Saturday and 3 hours on Sunday), you should be able to find time to get through the material. The things we do in the courses should also be really applicable to the things you're learning and doing on the job, so it sounds like a good time to put everything together. Hope to have you in the program!
But why would someone lease a piece of land, to invest into it by building something, just for it to then go to the landowner when the lease expires, leaving you with nothing?
Good question, and the short answer is that the returns can often still make sense. Most ground leases are 99 years, so a developer can construct a building, have that building cash flow, and then sell the property to another investor for a gain. Even if they hold the property for 10 years, there are still 89 years left on the ground lease, so the next buyer is still going to see value in the leasehold interest, since the improvements won't revert to the landowner for 89 years. Even as you get to the end of that 99 year term, often times you can re-negotiate the ground lease for another 50-99 year term. So at the end of the day, it can still make a lot of sense for an investor.
@@BreakIntoCRE Sorry for the late reply, but thanks a lot for explaining!
@@Nate-yr6du No problem, Nate - thanks for following up!
What happens if the developer files for bankruptcy or defaults on there Bank Loan? Can you please explain.
Are ground leases the same as recreation leases
appreciate it
Thanks for watching!
thank you for shearing information.
i have a question?
new neighbor moved to next my property with 5 years payment plan with rent to owne deal that means they are not owne the property yet.
and they start cut all big trees over 150ft tall and they traspass cut few of my big trees and solded.
im wandering how is responsble for damage?rentals? or property owner?
please halp thank you.
The company that was hired to cut the trees are responsible. Or whoever hired the company and told them that it was there trees. But if damage was done to your property but the arborist the arborist is liable
What if I have over 200 acres between two major highways and a city and I want to lease it for a casino?
Sell it
keep it
Bro that is the CBT nuggets music 🤭
Mate please write what you are talking about. I got on this channel we talk about real-estate investment couriers??????? and real-estate mmmmmmm, sounds like bloody "Koalas!" what are you talking about for crying out loud write it down because your accent is beyond me and I have no clue what you are saying!!!!!