Buying a property on leased land (National Forest especially)

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redrocker
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Buying a property on leased land (National Forest especially)

Post by redrocker »

I am interested to hear people's experiences in buying a home that is on land leased from the government. There are two properties in particular that I am eyeing in National Forests in the state of Oregon. I have only owned real estate where I "own" the land it's on so I'm curious what the pros/cons look like through the eyes of the Bogleheads hive.
miamivice
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Re: Buying a property on leased land (National Forest especially)

Post by miamivice »

I have not done it but:

1) Since you don't own the land, you can't tell people to get off your "lawn".

2) You have restrictions on what your house can look like.

3) Biggest concern - you have no control over the rates that the government charges you to lease your land.
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redrocker
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Re: Buying a property on leased land (National Forest especially)

Post by redrocker »

miamivice wrote: Wed Jun 23, 2021 3:39 pm Biggest concern - you have no control over the rates that the government charges you to lease your land.
Thanks. I'd read that after 2016 at least one of the cabin fees is permanently set and can only rise due to inflation (and is tied to the inflation index). Not sure if there are other related cabin fees subject to wide fluctiation.
Mike Scott
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Re: Buying a property on leased land (National Forest especially)

Post by Mike Scott »

You need a copy of the lease for each property to evaluate the terms.
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ResearchMed
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Re: Buying a property on leased land (National Forest especially)

Post by ResearchMed »

Is there an end date to the lease?
If so, and it's in the visible future, what would happen to your resale value as the end date approaches?

RM
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redrocker
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Re: Buying a property on leased land (National Forest especially)

Post by redrocker »

ResearchMed wrote: Wed Jun 23, 2021 5:30 pm Is there an end date to the lease?
If so, and it's in the visible future, what would happen to your resale value as the end date approaches?

RM
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Hayduke
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Re: Buying a property on leased land (National Forest especially)

Post by Hayduke »

We had a family member with a cabin on a 100 year forest service lease in CA. As I recall, there were some pretty restrictive rules regarding any changes to the structure. Difficult/impossible to do additions, add decks, change siding etc. Also, I think it had restrictions relating to seasonal usage.
Att the same time, it was in a one of a kind location, surrounded by nature, and afforded fantastic childhood memories. Might be worth a lawyer's time to look over the lease terms for you.
iamlucky13
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Re: Buying a property on leased land (National Forest especially)

Post by iamlucky13 »

A relative has one in Oregon. It is in a wonderful location (although there is potential lahar risk, but that's a separate matter). The price was lower than comparable properties on private land because of the lack of full ownership, and there is some risk as a result. Last time I asked about it, their lease rate was comparable to the property taxes on similar private properties. They also pay a community water service fee that is pretty steep.

Changes to improvements do need review by the forest service (even replacing windows), and they are very slow about it. Theirs is considered an historic area, and there are additional restrictions on size and style due to that.

Think of it like living in a very restrictive HOA, where the board is bureaucratic, but consistent and fair in their application of rules.
miamivice wrote: Wed Jun 23, 2021 3:39 pm I have not done it but:

1) Since you don't own the land, you can't tell people to get off your "lawn".
Although I don't know if normal tenant law fully applies, I don't believe this is necessarily true. I believe the property a relative of mine owns is on an exclusive lease, so aside for NFS managers doing inspections or other official business, I'm fairly certain they can tell people to get off their lawn. Many of their neighbors, in fact, have gates.
miamivice wrote: Wed Jun 23, 2021 3:39 pm 3) Biggest concern - you have no control over the rates that the government charges you to lease your land.
There is a financial uncertainty concern in general. I'd say the biggest concern is the government may at some point decide not to renew the lease. I think it unlikely, but it seems like in the worst case, any money you put into the property is gone.
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redrocker
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Re: Buying a property on leased land (National Forest especially)

Post by redrocker »

iamlucky13 wrote: Wed Jun 23, 2021 10:17 pm There is a financial uncertainty concern in general. I'd say the biggest concern is the government may at some point decide not to renew the lease. I think it unlikely, but it seems like in the worst case, any money you put into the property is gone.
Up to and including the purchase price of the building it seems (unless one is willing to pay the prohibitive cost of moving it, I guess?).
Thanks for the anecdote.
retiredjg
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Re: Buying a property on leased land (National Forest especially)

Post by retiredjg »

There may be more than one kind of "leased land" situation in the USFS. The one I am familiar with involves owning a building that can be used for "recreational use" but not for residency. A lot of people have bought these recreational use cabins thinking they were buying residences. It can become a real mess.

What has been posted about not being able to do what you want to your property is correct. Restrictions can be severe. And if the place burns down in a forest fire, you may not be allowed to rebuild. This is definitely a buyer beware situation.

If what you are looking at is a recreational use cabin and that is what you want, it could be a good thing. If you are looking for a home in the wilderness, that may not be what you are getting.

There should be a permit administrator at the local ranger station who can explain the terms of the permit to you.
Cyclone
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Re: Buying a property on leased land (National Forest especially)

Post by Cyclone »

This may not help the original poster. My family has owned a lakefront home since the 1960s that is not only in the Chippewa National Forest in Minnesota, it is also on the Leech Lake Indian Reservation. There's no lease, we own it. Lots of people own homes on that lake (Steamboat Lake).
We're white as can be, as are all of the neighbors, so I don't know how that works. Maybe those properties are grandfathered or something. There are no restrictions on what we can do with it, other than zoning things like you can't have a septic tank too close to the lake, etc.
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redrocker
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Re: Buying a property on leased land (National Forest especially)

Post by redrocker »

Cyclone wrote: Thu Jun 24, 2021 11:19 pm This may not help the original poster. My family has owned a lakefront home since the 1960s that is not only in the Chippewa National Forest in Minnesota, it is also on the Leech Lake Indian Reservation. There's no lease, we own it.
That sounds like the ideal combo, being in an area that is going to have strict limits on development but you also aren't as subject to the whims of bureaucracy.

I am guessing all else equal, two identical houses, one on leased land, the other on land you can own are going to be priced radically different.

Also going to have to figure out what the actual occupancy limits are if you aren't supposed to love somewhere full-time. Ok, what if I want to live there 6 consecutive months each year? What about 300 days a year? I'm uneasy that I haven't found an explicit answer on that.
retiredjg
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Re: Buying a property on leased land (National Forest especially)

Post by retiredjg »

redrocker wrote: Fri Jun 25, 2021 12:09 am Also going to have to figure out what the actual occupancy limits are if you aren't supposed to love somewhere full-time. Ok, what if I want to live there 6 consecutive months each year? What about 300 days a year? I'm uneasy that I haven't found an explicit answer on that.
If this structure is on a recreational permit (or any permit for that mater) the only place to get an answer is by reading the permit and talking to the permit administrator at the local ranger station. Different forests may have different requirements.
MrsBDG
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Re: Buying a property on leased land (National Forest especially)

Post by MrsBDG »

I believe the bigger risk, than increased lease fees, is non-renewal of the lease. I remember, about 20 years ago, when the Crystal Cove cottages' lease was not renewed, people were surprised and it was a financial loss for them.

https://losangeles.cbslocal.com/2017/03 ... on-rental/
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alpenglow
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Re: Buying a property on leased land (National Forest especially)

Post by alpenglow »

On Long Island, there was a controversy over private cottages on leased public land that went on for a very long time. Eventually, the leases weren't renewed and many lost significant value when their cottages were razed. One never knows which way the political winds may blow with these things.

https://en.wikipedia.org/wiki/West_Mead ... c_District
Tribonian
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Re: Buying a property on leased land (National Forest especially)

Post by Tribonian »

MrsBDG wrote: Fri Jun 25, 2021 8:46 am I believe the bigger risk, than increased lease fees, is non-renewal of the lease. I remember, about 20 years ago, when the Crystal Cove cottages' lease was not renewed, people were surprised and it was a financial loss for them.

https://losangeles.cbslocal.com/2017/03 ... on-rental/
Pretty sure Crystal Cove was state owned property, but it’s the same risk with federal leases. USFS elected not to renew 20 year leases in California within the last 20 years- maybe at Lake Berryessa? I remember the cabin owners sued- and lost but I can’t find an article, so maybe I’m confabulating.
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