Leased land : Good Steal or Bad Deal
Sunday Jun 17th, 2018
I recently had some first-time home buyers looking for affordable homes in the Greater Toronto Area. While they were on Realtor.CA, they started looking on the outskirts of Toronto and found some great deals in Simcoe County. They found homes that were priced $100,000 to $300,000 for a detached home which seemed like a great deal until we realized the homes were on leased land.
What is leased land? It means that you don't own the land on which the home is situated. The rental amounts for the lease can range from $700-$1000/month. In conjunction with the amount you have to pay for a mortgage, it may not make it such an affordable deal anymore. The other thing to realize that with leased land is that there may be increases to the rental amount and it could increase every year and it could be as much as $40-$100 a month and you have no control over the increases. It may also be difficult to get financing on leased land. Not many lenders are going to lend you give you a mortgage when you have a home on a leased lot. Finally, many of these communities outside of Toronto are actually senior or retirement communities and they have homeowners associations and homeowner association fees in addition to the monthly lease payments.