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Lease Land Designations and Usage - How to Find Land for Lease

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Published on Wednesday, August 17, 2016 by Land Century

Land leases are often unknown to potential land buyers. These are leases that can be given to you by the owner of the land, and government agencies in some cases. The process can be tricky because you actually won’t own the land if you lease it, but you have a right to the land in accordance with the lease that's assigned. It’s a very tricky process, and one that you’ll need to research in-depth in your area.

Real estate agents may be able to help you, and there are some sites online that offer listings for land for lease. A major issue is that many of the sites are unreliable, so you want to be cautious with which site you’re going to lease land through.

Government Auctions

Government auctions do exist that allow certain persons to lease land that is owned by the government. A good example of this is land that is owned by the government, but leased by oil companies. These auctions are often rather expensive, and is a way for the government to make money on land that it retains.

You’ll often find that these auctions include:

- Using the land for minerals
- Land that is on oil
- Land that's used for agricultural purposes

As the leaseholder, you will be responsible for making payments to the government, or whichever entity owns the land, and these auctions can range into the several million-dollar range if there are valuable minerals on the property.

You can find auctions by contacting your local jurisdiction and doing searches online to find potential land lease auctions in your area. Keep in mind that these auctions may not occur in your area, and you may need to travel across states to attend the auction.

Public Auctions

Many states, for example Nebraska, has public auctions routinely for land that is grassland. This is land that is used for grazing, and structures may be included in the lease. Companies often offer these auctions, and you can see an example here.

Types of Leases

There are several different lease types available depending on what you plan on doing with the land. You may find someone that is willing to offer a flexible lease wherein you have virtually full rights to the land aside from ownership. But these are very difficult to find.

The following lease types are the most common:

Hunting

Hunting land may be leased, but this is becoming less common. Essentially, this is land that you’ll have the right to hunt on for a specific period of time. Companies may lease this land to offer hunting to hunters, or individuals may lease this land.

Finding this land is becoming increasingly difficult, and it’s best to discuss this openly with land owners. If you know a farmer or someone that owns a large lot of land, it’s often best to discuss this option with them. Farmers are especially willing to allow you to hunt on their land because many animals will harm cattle or destroy crops and need to be handled appropriately.

Oftentimes, a farmer will grant you this right for free as long as you take care of the “pests” that are harming their land or business.

Oil Drilling

The government, as mentioned previously, often leases land for oil drilling. This is a multi-million-dollar situation, and this all goes through government lease programs. You may be able to find an individual that owns land that is on an oilfield, but this would be a very difficult process.

Grassland

The government and many landowners are willing to offer grassland leases. This is often best done by looking at local jurisdiction auctions as mentioned above. Many of the lots in Nebraska that are listed as grassland allow farmers to either cultivate the land, or use it for grazing.

Grazing is very popular, and you can also talk to local farmers that may have land available that you can lease.

Mineral Land

If a property resides on a gold mine, for example, you may be able to lease the land or go into an agreement with the owner that would allow you to effectively split the proceeds. Why would an owner want to do this? The reason is that they may not have the funds to work the land appropriately, but are willing to allow somebody else to invest in the process for a commission.

Developer Land Leases

Most of the time, you purchase a home with the understanding that you own the land. But a land lease isn't a standard home purchase. Instead, the purchase price is reduced, and the buyer of the home pays the landowner for the right keep the home on the land.

Many landowners will work with developers because they don’t want to undertake the costs of building on the property. Developers will have the right to build on the land, and the landowner will lease the land to the buyer of the home. There are some major considerations with this:

- Finding a lender can be problematic.

- Lease rates can increase over time.

- You’ll build equity only in the home.

- Selling the home may be difficult due to the land lease.

But as the buyer of the home, you’ll have the benefit of not having to pay such a high price when the land is not involved. The best way to find this land is to contact local developers to determine if they have any land lease homes available.

Leasing vs Buying

Leasing is the smart choice for farmers, hunters and for companies that need to drill oil on large lots of land. If the land is not optimal to live on during some seasons of the year, it may be better to lease the land for the spring and summer months if you plan on using it for grazing land.

But in most cases, buying land is the optimal choice if you have the money. When you lease the land, you don’t own it and you may find that the landowner doesn't want to lease the land again when the contract is up. If you using this land as your primary grazing land, this can be very problematic.
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