Irvine is one of the most affluent cities in Orange County, California. As a planned city, it was first developed in the 1960s by the Irvine Company. It was incorporated in 1971 and, according to the 2010 U.S. Census, has a population of 258,386. In 2016, Irvine was officially named as the city in the country with the largest Asian American plurality. About 45% of the city’s population falls under that demographic. With regards to its economy, the city is home to a lot of industries, including those that are in the semiconductor and technology fields.
Irvine Land for Sale & Lease – Should You Buy or Lease?
If you are interested in land, be that as an investment or for construction or other means, you have two broad options available to you: buying or leasing. There are pros and cons to both of these options.
Looking first at buying land, the pros include:
- You can lease out your land without having any income tax consequences, so long as you pay your income tax on the rent that you receive on the land.
- You become the owner of a property. This means you have the opportunity to have a truly productive economic use out of the land for a longer period of time.
- You may retain a degree of control over how the land can be used and developed. There are usually zoning restrictions in place, which you will have known about before you purchased the land, and this means that those who lease from you will not be able to redevelop your property in a way that you do not want them to.
Meanwhile, the cons are significant as well:
- You may lease your land out to a tenant and then allow the land to be used as security for the financing needs of the tenant. If the tenant defaults, the land could be at risk of foreclosure.
- You will pay income tax at ordinary rates on any rent you receive. This can be a disadvantage, depending on your personal tax situation.
- You must ensure you have a lease document that has ground control included in it, or the tenant could potentially completely redevelop the lot.
- You usually cannot borrow against the equity on the land while it is leased to a third party.
Your other option is to lease your land, which has some benefits:
- You will have much lower initial development costs, because you do not have to acquire any land.
- You can deduct all your rent payments from your state and federal income taxes.
But there are some downsides as well:
- Usually, the amount in the long term that you will pay for your lease will be much higher than the purchase price, although this is not always a disadvantage.
- You won’t have as much flexibility when it comes to how you would like to develop the land that you are leasing.
- You will probably not be able to take any equity out of your business or refinance anything due to ground lease limitations.
- A lease is classed as a “diminishing asset”, so that your business value will also be diminished at the end of the lease.
To help choose between the two options, being aware of the trends and statistics in terms of prices, supply, and demand, is often advisable.
Irvine Land for Sale – Trends and Statistics
There are numerous pieces of land for sale in and around Irvine. These include:
- A 0.16 acre buildable area at Lake Elsinore. The land is perfect for a private, lake view, hillside home and is currently available for $8,000. It has been zoned as residential land.
- A 3,867 square foot piece of land zoned for residential development at Lake Elsinore, perfect for the construction of a private family home on the hillside with lake views. It is currently available for $8,000.
- A 0.12 acre prestigious parcel with views of Lake Elsinore, zoned for residential development. It is currently available for $95,000 and comes with a 72-foot frontage.
Irvine Land for Lease – Trends and Statistics
There is currently only one opportunity available to lease land in Irvine, and this land has already been fully developed. They are medical, office, or retail spaces, of which only two remain. The lots range between 630 and 1,285 square feet and rates are between $34,20 and $45. It is zoned as office space and particularly suitable for medical offices. The property is newly renovated and includes clear street signage and direct exterior access.
Irvine, as you can see, does not have a lot of land available either for sale or for lease, and what is available is limited in terms of how it can be used. That being said, it is in keeping with the overall atmosphere of Irvine, which attempts to remain exclusive and highly affluent. As such, while the opportunities are somewhat limited compared to other popular areas in Orange County, they are very worthwhile and lucrative when they do come along.
It should be noted that when it comes to investing in land, a big caveat attached to it, which is that of zoning. In many cases, due to zoning, it is only possible to use a piece of land for a very specific purpose. While one can file for rezoning, this has to be paid for and is rarely successful.