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What Is a Ground Lease?

Ground leases can save tenants money while allowing landowners to monetize their property without major capital expenditures.

[Updated: Feb 04, 2021 ] Jan 18, 2020 by Matt Frankel, CFP

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Pros Cons
• Avoids the large upfront capital expenditure of buying land.

• Decades-long leases and the ability to renew the lease or buy the property at lease expiration.

• Reduced lease payments, as opposed to leasing both land and a building.

• Must pay for any land improvements themselves.

• Lose improvements to land after lease expires if they don't renew or buy.

• Responsible for paying property taxes, insurance, and maintenance expenses for the duration of the lease.

• May need landlord approval before construction can begin.

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