LAND LEASE BUILDINGS - THE POSITIVES AND NEGATIVES

Choosing to buy in a land lease building is ultimately a trade-off between cost and risk.When it comes to those enticingly low price apartment such as those in LIC's CityLights building or NYC's Carnegie House, there's something your agent should advise you on.

The positives and negatives of buying a land lease building are always up for discussion. Sometimes buyer's thing their agents just want them to cough up more money and buy a pricer unit but the truth is... these building's resale value is speculative. Only an experienced New Yorker and agent will outline what to look for when buying in a building that doesn't own the land it sits on (land lease), has an underlying mortgage, or is fighting the city's increase in property taxes.

A "land lease" or groun dlease is a lease on improved or unimproved land. The terms are usually between 50-99 years, which upon expiration they are up for negotiation to renew another lease with the land owner or buy the physical land in which the the building sits.  As property values naturally increase, the city reassesses land for more and more. With higher value assessments by the tax authorities, comes higher taxes in which the residents of the building will inevitably have to split and pay off.

Land lease co-ops such as the Carnegie House at 100 West 57th Street in midtown are so interesting yet once buyers see the monthly carrying costs of units, and learn of the board's intentions of buying the land the building sits on while combatting rising taxes, it becomes a risky purchase. A two bedroom can be purchased as little as $495,000! In recent talks through buyer representation I learned that increases can be anywhere from 9% a year to more as money is needed to pay for a negotiator whom will try and come to a price with the landlord of the property. 

To learn more about making your first of many home purchases in NYC, reach out and let's talk!