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A ground lease involves undeveloped commercial land that is leased to tenants, who then have the rights to develop and use the property for the duration of the lease. During the term of a ground lease, the tenant owns any improvements made to the property, including any buildings it constructs.
Like an ordinary lease, under a ground lease a tenant or lessee pays rent to a landlord or lessor and receives in return a right to possession and use of the property for the time period covered by the rent. Like an ordinary lease, ground leases generally call for rent to be paid on a periodic basis, typically monthly.
A ground lease is almost always a net lease with a term usually ranging from 25 to 99 years. At the end of the ground lease term, the landlord will either: Take ownership of the improvements free and clear of all liens. Require the tenant to demolish the improvements and clear the leased land.
The ground lease defines who owns the land, and who owns the building, and improvements on the property. Many landlords use ground leases as a way to retain ownership of their property for planning reasons, to avoid any capital gains, and to generate income and revenue.
Ground leases are considered a defensive investment choice, and the ground lease investor is able to realize a long-term stream of income without transfer of ownership, but rather through transferring control of the land in order to maximize an income stream over a fixed period of time.
3:37 10:01 Suggested clip All-in-One Walkthrough #7 — The Ground Lease Valuation Module YouTubeStart of suggested client of suggested clip All-in-One Walkthrough #7 — The Ground Lease Valuation Module
A ground lease is an agreement in which a tenant is permitted to develop a piece of property during the lease period, after which the land and all improvements are turned over to the property owner.
Ground leases are considered a defensive investment choice, and the ground lease investor is able to realize a long-term stream of income without transfer of ownership, but rather through transferring control of the land in order to maximize an income stream over a fixed period of time.
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