Buying in a community versus buying with land

Buying in a community means you own the home and rent the lot. The purchase price is much lower because you are not buying land. In exchange you pay lot rent every month, that rent can rise, and you accept the community's rules on alterations, pets, parking, guests, subletting, and often on who may buy the home from you.

Buying with land means you own both. The purchase price is higher and you will likely need more cash up front, but there is no lot rent, no landlord, and no community approval of your eventual buyer. If the home is on a permanent foundation and converted to real property, you can generally use conventional mortgage financing and the home tends to hold value like real estate.

The financing consequence is the one people underestimate. A home on leased land is normally financed with a chattel loan, shorter term, higher rate, while a home on owned land converted to real property can often be financed with a mortgage. Same purchase price, materially different monthly payment, before lot rent enters the picture.

There is a middle path worth knowing about: buying a home in a resident-owned community, where the residents collectively own the land through a cooperative. Lot fees cover actual operating costs rather than an owner's return, and residents vote on increases. It usually involves buying a share alongside the home, which financing has to accommodate.