The City of Orange is part of Orange County, California. It is just outside Santa Ana, which serves as the county seat. It is a unique part of the county because, unlike in other cities where buildings with old architecture have been demolished in the 1960s, Orange has preserved such buildings. As a result, many of those properties, and particularly those in the Old Town District, are from the pre-1920s. The reason for this uniqueness can be found in the city’s focus on antique stores, which have helped to attract tourists, as well as visitors from other parts of the county. The city of Orange had a population of 139,812 as of 2014. The biggest employers in this city are the government, educational institutions and health care providers.
City of Orange Land for Sale & Lease – Should You Buy or Lease?
If you are interested in land in Orange, you have two choices: buy or lease. And it should be noted that there are pros and cons to both of these options.
Looking first at buying land, there are 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 it for a long 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 should be aware of before you purchased the land. 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.
On the other hand, buying land has a number of disadvantages:
- It is possible that your tenant allows the land to act as security for a loan. 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 the lease contract 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, simply leasing the land that you need has a number of benefits:
- You will much lower initial development costs, because there is no need for a down payment.
- You can deduct all your rent payments from your state and federal income taxes.
With regards to the downsides of leasing, there are some of them:
- 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 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 diminish.
To help choose between the two options, it could help to know the trends and statistics in terms of prices, supply, and demand for land in Orange.
City of Orange Land for Sale – Trends and Statistics
Currently, two plots in Orange are classed as land and are available for purchase:
- 6.01 acres of residential land for an undisclosed price at 290 South Yorba Street
- 0.41 acre of industrial land at 125 North Pixley Street, priced at $1,600,000
City of Orange Land for Lease – Trends and Statistics
There are currently two pieces of land for lease in Orange:
- 410 West Grove, which has five warehouse spaces available. The rate is negotiable.
- 1607 North O’Donnell Way, which is a 28,770 square foot plot of industrial land, priced at $3.12 per square foot, per year.
What these statistics consistently show is that investing in land, whether for purchase or for lease, has 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 specific goal. While rezoning applications can be considered, this has to be paid for by you and they are rarely successful. Thus, it would be prudent to check out the zoning of a particular piece of land that you are interested in before proceeding further.