What commission would you propose for an off-market deal for a 50+ year ground lease?

Answers from anyone who has been involved with a similar transaction would be of particular interest.
In Leasing Property - Asked by Al T. - Oct 18, 2012
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Answer(s)

Dean G.
Broker/Agent
Jacksonville, FL

The way I would handle it would be to accept a six percent commission based on the appraised value, or potential sale price of the property, unless the lease rate is so low that the aggregate value of the lease over fifty years still did not exceed the value of the property. Technically, I would expect the aggregate value of a fifty year lease may actually exceed the appraised or assessed value of the property. My experience with long term leases involves research work for a railroad company. The long term leases that I researched involved 99 year leases, which were so far back some of the leases were with the chiefs of Indian Reservations. The big issue with a long term lease is going to be "time value of money" over a long term period. A lease for $10.00 per month from 100 years ago with no CPI increases, or cost of living adjustments would tie the generations of the owners to minimal income as the rate of inflation increases. Some sort of COLA - Cost of Living Adjustment should be considered, both for individual land owners, and corporate holders of real estate.

Oct 24, 2012
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Monica M.
Owner/Investor
Valencia, CA

If it's off market then negotiate LOW. Everything is negotiable. Start at 1.5% and see what happens.

Nov 1, 2012
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