Having researched this since posting the question myself, it turns out that the lot lease is quite popular and has considerable value to many residents. Lease rates, even with reasonable increases, are typically a better deal than property taxes and associated costs of land ownership. Taxes on the home itself typically go down because it is personal property. But the homeowner gets 100% of the appreciation on the value of the land and the house when they sell. Plus the homeowner keeps or invests the typical $50,000+ that a lot costs. They could actually generate income rather incur costs. I’ll post some hard figures and facts on my RetiredInSpokane.com domain this week.

Wed May 14 2008, 10:13

Hey Pat,
I personally think it's much better to own the land rather than having to lease it, though this isn't an option on any of those retirement developments I have checked into, but maybe some do? There are some really nice communities like that and the homes themselves are really affordable but the leased land rent is usually $330+ p/mo. (Such as Sunny Creek and Sundance Meadows) That's seems very expensive to pay each month for ground that you'll never own and re-sale on those has been very tough in my experiences. To me it's basically like renting your home and expensive renting at that. I have had clients start in that direction and after doing the math we went for either a no yard maintenance condo or townhouse instead that was a bit more expensive on the purchase price but after the leased land rent was actually less each month. That has been my experiences anyway, hope that is helpful and take care! Chris Warmuth Windermere/North

Tue May 13 2008, 15:31

I think this all comes down to monthly cash flow for the retiree. Investment value should not be a big consideration since wealth accumulation should already have been handled in pre-retirement years. Owning has the obvious advantage of more certain future monthly costs. Taxes, insurance, maintenance and yard care will all increase but you don't have to worry about space rent. On the down side, the owner will give up whatever cash flow was being created by the money needed to buy the land. Owning also ties the owner to the property. You need to sell to move instead of just living out the lease. If you like to move frequently, leasing is a better way to go. This is one of those questions that doesn't really have a right answer.

Mon May 12 2008, 10:42

Owning land is always better for resale value, but you have to go by your preference. The drawbacks to leased land is that you don't own it so rent can increase and eventually the lease can come due.

Mon May 12 2008, 08:06