Private Property or a Land-Lease Community?
by Chrissy Jackson, ACM, PHC
This article will help you weigh the benefits of both, then make the decision based on the areas of greatest importance to you.
- Guidelines – Communities have Guidelines (formerly called rules and regulations) which set parameters for acceptable behavior in close quarters. Private property has none. Your neighbor in private property can blast their stereo in the afternoon and early evening, let their grass grow a foot tall, and your options for help are about nil to nothing. In a community, the manager is on hand to take control and enforce the Guidelines.
- Amenities – Communities generally offer some type of amenities: pool, playground, clubhouse, street lights, paved driveways, tennis courts, shuffleboard, planned activities, and/or professional management. Private property usually comes with none of the above unless the owner installs them at his expense, or unless the private property is located in a subdivision.
- Real Estate Taxes – In a land-lease community, the resident’s share of the real estate taxes are included in the monthly rental payments. On private property, they must be paid separately.
- Personal Property Taxes – Generally speaking, personal property taxes are lower in a manufactured home community than they are on private property. However, because schools can impact tax rates significantly, know for sure where the specific community you are considering stands on this issue before assuming a lower rate as a benefit.
- Resident Screening – In a community, there generally is a resident screening process. Private property requires only that the applicant qualify for a bank loan, or pay cash. As the owner of private property, you never know who might move in beside you. In a community, you can rest assured that your neighbors had to meet the same financial criteria, employment verification, landlord reference checks, and sometimes even criminal checks, that you did.
- Utilities – The provision and maintenance of the infrastructure which provides utility service to residents is the responsibility of the community owner. This may or may not include a well, septic tank system, lift station, or waste water treatment plant. On private property, if the sump pump in the well goes out, it is the home owner who has to fork out the money to have it repaired. If the septic tank fills up and won’t drain properly, once again, the homeowner has to dig deep – and maybe miss work on top of that to meet with the contractor doing the repair.
- Monthly Cost – Generally speaking, the monthly cost of renting a homesite in a land-lease community is less than the cost of owning land. Long term leases with escalator clauses provide a sense of security to a resident – not because they know how much their rent increase will be each year, but because they know how it will be figured.
- Location – When people think of private property, they usually think of their own little world – far away from everyone else – miles (or at least several hundred feet) from their nearest neighbor – and, guess what? That also makes them miles from all the other conveniences of life. Like shopping, schools, churches, banks, groceries, doctors, hospitals, etc. Real estate values are determined by location, location, location. So are your values. Learn how your choice of community is situated in terms of the surrounding area, and where a homeowner would have to go if they were buying private property for siting their manufactured home. Then decide if the benefits of living closer to the “comforts of civilized life” take a high place in your priorities!
- Easier to Purchase – Buying a manufactured home (new or pre-loved) is easier to qualify for – easier to finance – than buying a traditional site-built home. Approval times are almost immediate with the chattel loans used for manufactured homes as compared to the volumes of paperwork, surveys, etc., required for purchases and/or financing which involves land.
- Security – Within a community there may be a Neighborhood Watch Group, or a Crime Watch Program, or a Multi-Housing Crime Free Program for the added security of the residents. If none of these is present, there is still the sense of “neighborhood” which creates closer relationships than generally found on private property placement. People feel closer to each other in a community and look out for each other.
- Social Recreation – The clubhouse, common area, playground, or just the mailbox area all provide excellent opportunities for residents within a community to socialize. If your choice of community has a pool, tennis courts, basketball courts, shuffleboard, hiking trails, or other amenities, there are even more opportunities for recreations. In private property placement, unless it is a Planned Unit Development (PUD) there is usually not any type of recreation facilities, nor planned social recreation of any type. Most communities with a clubhouse have some sort of planned activity program – either led by volunteer residents or by management.
- Relocation – If your plans at some point in the future call for relocating, consider your options. Often an unavoidable circumstance, such as job transfer or promotion, family health matters, or financial issues force you to relocate. When that becomes necessary, you can usually vacate a rented homesite with a 30 day notice, and take your home with you. You then have no further responsibilities to the community owner except for perhaps a final utility billing. In a private property situation, the land must be sold, or payments must continue even if you take your home with you.
- Resell – Or, if you must relocate and want to resell your home rather than taking it with you, again, it is easier if your home is located within a land-lease community. The financing for the new buyer is quicker to approve, quicker to arrange, the selling price is less since there is no land, and the value of the home should hold in comparison to the value of the community. On private property, the selling of a land/home package is no different than the selling of a conventional site-built home. It can take quite a bit of time to do all the necessary paperwork and legal research required to sell land.
- Maintenance – Life in a community is commonly thought of as a “maintenance-free” lifestyle. And, while the homeowner is responsible for the little bit of maintenance and upkeep to his homesite and the home itself, it is extremely minimal when compared to the maintenance requirements of a homeowner who also owns his land. If the private property is not in a PUD or subdivision with municipal water and sewer, the homeowner will be responsible for the operation of the septic tank and well. On private property, homeowners are also generally responsible for the power pole providing electric service to their home. And, since most private property lots are considerably larger than the homesites found in communities, there is more grass to mow, more landscaping to plan, plant and prune, and more trees to trim.
- Investment (Initial and Monthly) – Since the purchase price of a manufactured home located in a land-lease community is significantly less than that of a home with land, it stands to reason that both the initial investment (formerly called down payment) and the monthly investment are also considerably less.
- Snow Removal – Most community owners who operate in areas of the country where there is snow are prepared for that event, and have either the equipment and manpower necessary to keep the roads inside the community clear, or have a contract signed with someone who can. If you as a homeowner buy your own land, you are then subject to the master plowing schedule of the county or municipality where you locate. And, since we already established that the urge to buy private property is fueled by the urge to return to nature and leave civilization far behind, that often means secondary roads, which are not plowed with any great regularity in many areas. Nor are they first on the list to plow even in areas where they are plowed. That may mean missed days of work if the homeowner can’t get out onto the main roads.
- Professional Management – Obviously only available in a community, this single area is responsible for the appreciating home values, the positive aesthetic qualities, the constant curb appeal, consistent enforcement of guidelines, and all the myriad of other things that make the lifestyle of a community what it is. Check into the turnover rate of residents within your choice of community; the general values of homes on the resale market; the longetivity of residents, and the things that make a difference to you between a community and private property.