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Leasing vs. Owning

October 05, 1986

Two articles on the front page of the Sept. 28 Real Estate Section of The Times dealt with mobile home park ownership. One of them covered leasing as opposed to owning, while the other was slanted toward park ownership by the residents.

The first described the sales promotion of the park in Santa Maria which is offering 20-year leases, providing for annual rental adjustments based upon the Consumer Price Index. In extolling the virtues of leasing, the claim was made that the resident who buys the land would lose the interest on the large investment required for such purchase.

This argument overlooks the fact that purchases of this nature customarily are financed with only a modest down payment. Amortization costs of the loan plus operating costs in the case of a resident-owned park by means of a non-profit, mutual benefit corporation have proven to be far less than rental costs by an outside owner. Further, the resident owner is not faced with the necessity of a possible unfavorable lease renewal at the end of 20 years. Who wants this when he is approaching his 80s? Another advantage accrues to the land or corporate shareowner, as the case may be, from the tax deductible interest portion of his loan costs.

In the second article, we learned how a clever speculator can buy a park and then convert it into a resident-owner plan of one sort or another and thus reap a handsome profit, all at the expense of the residents. Why would it not be better and smarter for the residents to band together and buy on their own? It is an idea whose time has come. It is being promoted by the Golden State Mobilehome Owners League, whose function is to protect the interests of park residents.

JOHN C. DAVIS

Irvine

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