For folks considering the purchase of a manufactured home, the terms “land lease fee”, “lot rent” and “pad rent” can be confusing to understand. But it’s important for potential buyers to know if a land lease fee applies to a home they are considering buying, and what it all means.

Definition of a land lease community
A land lease community is one where the owner of the home leases the land
under which the home sits from a third party.

The most common land lease communities are manufactured home communities and in this case, the third party can be a private individual, a group of private owners, a private company or a publicly traded company.

Definition of a land lease community
A land lease community is one where the owner of the home leases the land
under which the home sits from a third party.

The most common land lease communities are manufactured home communities and in this case, the third party can be a private individual, a group of private owners, a private company or a publicly traded company.

Should I buy a manufactured home located in a land lease community?

There is no one right or wrong answer, but it’s important to understand the facts.
For people interested in buying a home, manufactured homes are the most affordable homeownership option available. Manufactured homes can cost half as much per square foot to build than site-built houses. The money saved in paying land costs can be applied to interior and exterior upgrades, such as interior finishes and amenities like walk-in closets or installing a more efficient heating and cooling systems.

When an individual buys a home in the land lease community, she very often gets access to community facilities and amenities. Some communities offer a wide variety of first rate amenities such as swimming pools and spas, fitness centers, kids playgrounds to communities with more basic amenities, if not at all.

Senior adults living on a fixed income often find that manufactured home communities offer great value, not to mention that they can be free forever of yard and lawn maintenance.

The cost to rent a manufactured home with land in a land-lease community averages between $844 and $935 per month in many parts of the country. However, there are thousands of communities nationwide with monthly fees under $500 per month.

Consideration
Land leases are generally renewed on a yearly, or monthly basis. Get a clear understanding of any potential lease rate increases.

Read the terms and conditions. Pay attention to the surrender clause to avoid unpleasant surprises. And another drawback of the lease land community is the limited appreciation potential of the home. Homes sited within a land lease community can, but rarely do appreciate. It depends heavily on location and local market conditions

Land-lease communities are often run by a professional management company instead of a Homeowners’ Association (HOA). Both have their advantages and disadvantages. A HOA board is typically comprised of elected residents and sometimes things can get political. With professional management companies running things there may be less chance for disagreements among residents.

When considering the purchase of a manufactured home in a land lease community, having a clear understanding of all the options will help you make the most informed choice.