Author Topic: Forest Service Lease?  (Read 8874 times)

Fuzz

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Forest Service Lease?
« on: July 03, 2015, 01:00:31 PM »
Just checking if anyone has ever looked at leasing a forest service cabin. There are around 12,000-14,000 cabins on USFS land nationally. The cabins are privately owned, but on land leased by the Forest Service (sort of like a trailer park). You buy the cabin on the private market. There are leases for 20 years that may or may not be renewed. A couple years ago the forest service raised lease rates and the owners organized and got the federal government to reverse course. You can't live there year round, but what that means is up for discussion/creative interpretation. You need a domicile somewhere else, but that could be a trailer or something like that. The leases are capped at $5600/year, and it's indexed to inflation. The leases range from $850/year to $5600/year based on the value of the land.

Pros: really unique locations. Much cheaper (for example, in areas like Tahoe/Mt Hood you might see a cabin for $150K that would sell for 750K-1M, if it were on the private market; alternately, you can buy something that straight up doesn't exist on the private market--crappy, rustic cabin with 100s of acres of land to itself, often within an hour or two of a major metro area). With the Feds as your landlord, you get notice and some due process if they aren't going to renew the lease.

Cons: Federal government for landlord--any renovations probably require approval. The monthly lease fees don't don't "build equity." Lots of creative things (sublease, airbnb, live there for 9 months of the year) either violate the spirit of the lease or require special permission from the district ranger. Virtually no private loans available to facilitate the purchase, although seller-financing is reputed to be common.

I think the fact that it's such a weird deal and there is so much perceived insecurity mean that you could get a smoking deal. But the smoking deal is only a smoking deal if the Forest Service doesn't change tack in the future. I think there is a lot of institutional inertia out there. The federal government is not profit-motivated, which makes it an interesting counterparty in a deal.

Anyone with personal experience to share? FS administrators lurking here?
 
« Last Edit: July 03, 2015, 01:18:16 PM by Fuzz »

forummm

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Re: Forest Service Lease?
« Reply #1 on: July 03, 2015, 02:40:15 PM »
Do you have more info on this? Like a website or listing of properties or more information for someone who's interested?

Fuzz

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Re: Forest Service Lease?
« Reply #2 on: July 05, 2015, 01:38:28 PM »

forummm

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Re: Forest Service Lease?
« Reply #3 on: July 05, 2015, 04:51:20 PM »
So if the lease doesn't get renewed, you're out whatever you paid for the cabin?

Fuzz

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Re: Forest Service Lease?
« Reply #4 on: July 06, 2015, 08:57:16 AM »
So if the lease doesn't get renewed, you're out whatever you paid for the cabin?

Correct. But most likely you'd receive some sort of compensation for taking the cabin. In 2014, the Federal Government passed the Cabin Fee Act, which capped the max lease payment. So there is some "political risk" in the same way as if you invested in real estate in Venezuela. The government can mess with your asset, which drives down the price of the asset to the point where it's interesting to me.

Also, you can remodel the cabins within bounds. So more brown paint is OK, maybe a new roof, but you can't really mess with the footprint.

Another Reader

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Re: Forest Service Lease?
« Reply #5 on: July 06, 2015, 10:02:45 AM »
If the property is in California, don't you have to pay property taxes on the possessory interest in the exempt property?  That might not be an insignificant amount when added to the taxes on the cabin.

Another Reader

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Re: Forest Service Lease?
« Reply #6 on: July 06, 2015, 03:19:30 PM »
In most cases, a leasehold interest in otherwise exempt public property is taxable.  You possess the land for a number of years (the term of possession) and you pay rent.  That leasehold interest is taxable in California.  The cabin and the possessory interest in the land may be billed as one unsecured account, but unless forest service land is excluded, the leasehold interest would be taxable.

Common examples are privately owned hangers at public airports.  You own the hanger and lease the land and you are taxed for both the hanger and your leasehold interest in the exempt airport land.

forummm

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Re: Forest Service Lease?
« Reply #7 on: July 06, 2015, 05:42:17 PM »
I guess the cabins are nice because they have a little more space than an RV. But what about if I have an RV (or 2) or want to plop down a trailer on some land somewhere? Is there FS leased land I could do that on? It seems like that could be a cheaper model, and if I lost the lease I could drive off or whatever. If there are utility hookups, that should be all you need.