The city of Newport Beach is situated on the coastline of Orange County in California. In 2010, it had a population of some 85,287 people. Its Newport Harbor, is very popular amount recreational boaters. Newport Beach is a very rich community, with both property values and median family incomes ranking among the highest in the United States. In fact, the Costa Mesa newspaper, the Daily Pilot has reported that at least 25% of households in Newport Beach earn $200,000 or more per year, and that property values have a median value of $1 million or more. This puts the house prices in Newport Beach in the eighth place in the entire country, in 2009. On a side note, Newport Beach is the most Republican city in the state.
Insurance company Pacific Life, which is a Fortune 500 company, is based in Newport Beach. Other notable companies that are located in the city include Conexant, Acacia Research, PIMCO, Jazz Semiconductor, and Galardi Group (Tastee-Freez, The Original Hamburger Stand, and Wienerschnitzel). Furthermore, the world’s largest Mercedes-Benz dealership, which is Fletcher Hones Motor Cars, is also found in the city. Now dissolved, Air California used to have its headquarters there as well. Stradling Yocca Carlson & Rauth is the largest law firm in the city, having 75 lawyers. They are based in Fashion Island. Calty Design Research, which is a design center for Toyota, is also based in Newport Beach, and they are known for having designed the Celica’s 2nd, 5th, and 7th generations’ exteriors, as well as some Scion and Lexus models.
Newport Beach Land for Sale & Lease – Should You Buy or Lease?
If you are interested in land in Newport Beach, you can either buy or lease. There are pros and cons to both of these options.
Buying land has several advantages:
- 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, which means you have the opportunity to have a productive economic use of the land for a long period of time.
- You may retain a degree of control over how the land can be used and developed. Of course, 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.
There are also a number of disadvantages in buying land:
- It is possible that you, as the property owner, will lease out your land to a tenant and then allow the land to act as security for the financing of the tenant. If the tenant then 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 that you have a lease document that has ground control included in it, or the tenant could potentially completely redevelop the plot.
- You usually cannot borrow against the equity on the land while it is leased to a third party.
Meanwhile, leasing the land has a number of advantages:
- You will have far 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.
Naturally, there are some disadvantages when leasing the land:
- Usually, the amount in the long term that you will pay for your lease will be much higher than had you purchased the property. This is not always a disadvantage, however, as it depends on whether you intend to be at the same location for a long period of time.
- You won’t have as much flexibility when it comes to how you would like to develop the land that you are leasing, and this may make it more difficult to run your operations in the way you want to.
- 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”, which means that, towards the end of your lease agreement, your business value will also be diminished.
Newport Beach Land for Sale – Trends and Statistics
There is currently no land for sale in Newport Beach. This is mainly due to the fact that there is no new land that has been earmarked for development. Additionally, the vast majority of empty plots of land have been used for construction.
Newport Beach Land for Lease – Trends and Statistics
There is currently no land for lease in Newport Beach.
It should be noted that there is a big caveat with land, whether purchasing or leasing, and this has to do with zoning. Due to zoning, it is only possible to use a piece of land for a specific goal. It is possible to apply for rezoning but this is rarely approved.