Land vs Resident Owned/Share Owned/Co-Ops
As you reach
your retirement years, typically your income is reduced from your peak earning
period, and you must seriously consider methods of using your assets to your
best advantage. Whether your money is
from a nest egg saved over the years, or profit from wise investments or the
sale of your long-time home, is it in your best interest to tie up a
substantial portion of it in the purchase of land?
Consider your options. One is to commit a large amount to the purchase of land
- an arrangement whose primary beneficiary is the developer. The other is to
purchase a less labor-intensive home on leased land.
Some Agents still push land purchase, claiming land ownership frees you from
additional financial obligations. However, this is not the complete story. Land
ownership is an expensive way to live due to high property taxes and
maintenance fees. You will pay an
additional $35,000.00 and up for a lot in a subdivision or community. You will pay on an average $2200.00 or more
in property taxes, and most likely maintenance fees on an average of $250.00
per month. You could also be charged
assessments for community improvements as needed and that could be any where
from $50.00 to $1500.00 per month or more.
In addition land ownership ties up your funds - money you can utilize
only by selling the land or taking out an additional mortgage (and paying
substantial interest to use money that was already yours.) In a leased land arrangement everything is
included in your land lease. The
community provides the security, maintenance, recreational facilities, plus
maintains all the common grounds of the community! This leaves your hard earned retirement
income in your bank account drawing interest!
In leased land communities you lease/rent the land.
The lease is renewable yearly as long as you like to renew. The
rent can only go up 2-7% yearly.
Normally, if minimum wage or social security goes up $2.00 then your lot
rent goes up $2.00. This is governed by the state therefore your lot rent can't just go
up more than 7%! Because you are on
leased land you do not pay property
taxes! There are also no maintenance, assessment, or home owner
fees just lot rent! Maintenance and
curb appeal of a leased land community is included in the lot rent as well as
all the amenities of the community such as the clubhouses, pools, spas,
libraries, billiards, tennis, golf, lakes and whatever else the individual
community offers as well as neighbors sharing your ages and interests and
everything is maintained and those costs paid by community management! Continuing professional management also
assures you of quality throughout the community. Your
lot rent pays for you to use the resort-quality amenities! In some
cases the lot rent also includes the cost of your trash, water and sewage bills
and sometimes lawn care. If these
items are not included they are as follows.
Generally electric is about $80 per month. Water is about $30 which includes sewer. Insurance is about $600 per year. Cable is about $40 per month. Lawn maintenance $25 per month. Trash $15 per month. There is no difference in regular lots,
canal, lake, or golf course communities other than the price per month for the
view. Generally a canal, lake view, or
golf course view will be naturally a little higher than an interior lot. A site built home in Florida has a milliage
rate of 17% which is a very high tax rate for land. This is why these communities on leased land
are so popular especially for snowbirds such as you might be! This is why 9 out of 10 people who purchase a
manufactured home in Florida lease their home site! Another big advantage to you is the
community watch program of a community.
You can literally close the door and leave giving you the peace of mind
that your home is being looked after and cared for when you might be away. The 55+ and all age communities that we will
show you pride themselves on this program for people just like yourselves. Don’t
forget the hugh advantage that you will not be paying property taxes anymore on
your home because you are on leased land!
You also save tremendously due to the fact that you are not purchasing
land. The two of these, the cost of land
and property taxes, as well as the other fees you will save adds up to money in
your nest egg and/or savings that is better off held by you or invested than
spending in which you need not do. In
other words, keep your money in the bank and draw interest or invest! Polk County has the lowest cost of living
index than any county in Florida! We
will show you many homes the same year, make and model priced lower than our
neighboring counties, and as it says our cost of living is much lower from gas
to groceries! We are eager to work
with you, so feel free to call or email your request for an appointment when
you might consider a visit so we can really show you all the in's and out's of
leased land communities and the many attributes leased land living will provide
Resident Owned/Share Owned/Cooperative
Housing Corporation (Co-Op)
All of these are the
same. It is an alternative to leased
land. It is an alternative that may be
good for some but in most cases is not. Manufactured home communities usually own the
land, utilities, and community facilities; their members own the
individual homes and use legal documents
including recorded covenants as the basis for maintaining the desired controls
over functioning of the community.
These types of ownership
are formed when people join with each other on a democratic basis to own or
control the housing and/or related community facilities in which they live. The
distinction is you still don’t own the real estate. You are buying a share. When you buy a share you are paying for just
that: a share of the community. The
average cost of a share is $30-$35,000 on top of the price of your home. You no longer pay lot rent, but you still pay a monthly maintenance fee which
in most cases is ½ the cost of lot rent and sometimes includes things like the
trash bill. You will also incur charges to
cover your proportionate share of operating and maintaining the community. These charges can include blanket mortgage
payments the community owes, property taxes, management fees, maintenance
costs, insurance premiums, and utilities of the community itself, and
contributions to reserve funds. Because
you would now own a share, you would also now pay a property tax bill on the
This arrangement is best
considered if your lifespan is expected to be a longer term you have to weigh
the differences. You need to compare the
lot rent you would pay over your expected life expectancy verses the additional
cost you will in tail if purchasing the share.
Another note to consider is that if you purchase a share and you finance
that share, you will be paying interest on that share. You would need down payment money that would
normally be in savings earning interest.
Often times what you pay a Lender for the share will amount to what you
would be paying on lot rent in the first place.
Buying into a Community share does have its benefits but again, you
really have to weigh the pros and cons and every individual is different.
Comparing A Co-Op vs A Leased Land Community
Leased Land Community
Tenants lease the land their home sits on.
residents are shareholders in a community that owns the property.
Tenants pay lot rent specified in lease that sometimes includes trash, water,
and sewer. Lot rent is normally more than a Co-Op maintenance payment but you
pay zero property taxes and have no other financial responsible liabilities
of any kind.
pay the community for their monthly share of the actual operating cost,
building mortgage, and real estate taxes, based on the operation of the
entire community. Trash is sometimes included. Monthly payments are normally lower than lot rent; however you
will pay property taxes because you in essence now own a share of the land
and take the responsibility for it.
Decisions are made thru Home Owner Associations. Maintenance and costly
repairs are the responsibility of the Community owner, not you.
resident members elect their board of directors, which decides all policy
matters. The Board usually sets up several committees to help run the
community. Maintenance is the responsibility of you the share holder.
Federal Tax Benefits:
saved and did not pay real estate taxes of any kind in the first
place! Thereby hoping this money was saved in a savings account
earning interest all along! In some
cases depending on your tax rate you can deduct the lot rent you paid.
Federal Tax Benefits:
share of mortgage interest and real estate taxes are deductible on your
personal income tax return.