Buying leaseholds as investments?

Question

I wanted to start a discussion on leasehold properties versus freeholds. My knowledge on them is quite limited so I'm not familiar with the ins and outs or the strategies that they could use. Does anyone have any experience buying leaseholds as investments? Are you looking for anything different compared to freeholds or are you using a different strategy for them?

Leaseholds are typically cheaper then freeholds. There's a much lower cost of entry to get into a market if you buy leaseholds. Would you recommend buying them?

Account Closed · Answer

@Elijah Williamson leaseholds are less expensive as you lease the right to use a property for a period of time.  You do not own the land. Some leaseholds are long-term and may be worth a look if they are likely to expire after you do (ie 80 years remaining on a 99 year lease). I wouldn't buy anything with less that 25 years remaining, unless you have a solid exit strategy.

Elijah Williamson · Answer

@Chris Baxter

I've heard some investors buy properties with little time remaining on leaseholds then extending the leases and selling again. Is this a viable strategy? Personally I've never met anyone who's done this and have heard very little on it.