Back to our building: Once the land is leased at one rate, the land owner might sell the lease to a long term investor such as a pension plan or insurance company and recover much of the cost of the land in the process. Aristotle Onassis freed and cleared all his ships and made $ billions in the process by leasing them to solvent tenants, then pledging his leases for enough money to build the ships. If an investor pays for all an entrepreneur’s costs for a share of the profit, isn’t this about the same thing?
Once the building has been built, the overall building can then be leased by a building management such as Trammel Crowe or Marriot. Then each floor, room, apartment, office, etc. can be leased and subleased, with a profit being created with each transaction.
At the age of 22 I was in the mail order business. My company, Memory Institute, was operated out of a footlocker at the end of my bunk in a barracks in New Jersey, but my mailing address was Suite 8509 in the Empire Estate Building. I paid $20 per month for a mail box to a guy who leased the office from the guy who leased the floor from the guy who leased the building from a guy who leased the land. Everybody made money; even me.
Are we done yet? No. Do you remember when King Kong was hanging onto the radio tower atop the Empire State Building? The tower was erected on the leased roof of the building.
That brings us to Air Rights: Once we’ve left the surly bonds of earth and soared skyward, we enter the realm of air rights. The old PAN AM building that shows up in all those old 1950 New York movies wasn’t built on leased land. It wasn’t built on land at all. It was built solely in lair rights leased from the owner of the land beneath Grand Central Station.
So is Chicago’s Merchandise Mart; a monster building erected in leased air rights along Lake Michigan. It sits on monster steel and cement supports that sit on rented easements. The owners of the Merchandize Mart even have to lease about 6 inches of air rights on all sides of the supports because the building sways a little into that space, which is rented.
I’ve only scratched the surface of the profit centers that can be exploited by those who understand all the attributes of real estate that can be converted from dead equity to income without disturbing the fundamental utility of it.
A farmer who leases an easement for a gas line across his property is oblivious to it, but not to the check he gets every month for the lease on his easement.
The person living in a rented house doesn’t care whether or not the house or the lease has been pledged for more money to invest in other rentals.
The oysters that grow on the ground beneath the water rights that are leased for a marina boat slip don’t taste any worse for it.
The remote parcel of desert land whose water rights were bought in order to build a casino in Reno doesn’t look any worse for wear.
From this point onward, look at every property as if you were Zeckendorf: What would an obsolete ugly old trailer camp be worth if it were converted into a modern manufactured housing land lease community?
How much more would the land beneath a condemned gas station be worth if it could be cleaned up to meet EPA standards?
Could you buy a small plot of ugly land in an industrial district and sell it for what it cost, and make a tax free profit by keeping all the sub-surface, water, mineral, and air rights? One guy did this hundreds of times in Philadelphia. Now these rights are being leased for municipal improvements.
Could you buy tax liens across a strip of land on which construction would block the view of adjacent residents, then sell it to them at a higher price as insurance that their view would never be blocked. Would their own land be improved? Could you trade them this land for a long term Option that would divide any increase in value?
If you let your mind run free, there are so many ways to capitalized on the possibilities that nobody else is thinking of. Isn’t that a better way to make money?
