Life Tenancies and How They Work as Property Investments

by Property Management Software on April 9, 2013

If you’re looking to invest in property, you likely have an array of choices. You may not realize that life tenancies are just as possible as condos, homes, apartments and other typical spaces. How exactly can life tenancies work as property investments? Read on to find out!

Understanding Life Tenancies

This term is not one of the easiest ones to understand in the world, so let’s first work on that. Basically, a life tenancy means that a person has a right to a particular property until he or she passes away. If a person is renting out a portion of a life tenancy from someone who passes away, then the right to that piece of land or property will then expire.

Investments for Owners

Let’s say that you have a life tenancy on a house in a desirable vacation area. You own that home, but you certainly aren’t able to go on vacation every day of the year. When you are away, you’re able to rent out that home or possibly even rooms in the home, with the proper permits, to people who want to vacation there. Be sure that the amount you charge is competitive for the area it’s located – you may be surprised what some people pay for temporary arrangements.

For Other People

Even if you don’t necessarily have a life tenancy on a property yourself, you could still profit from one. Let’s say that you buy a property from a person with life tenancy on it. You could, with the proper permits, rent out portions of it to other people, and then generate profits. However, you must strongly consider what is going to happen when the person who has life tenancy on it passes away. Speaking with a real estate lawyer is a smart idea for this instance.

Future Preparations

You also need to figure out what you are going to do with the property when you pass away. Generally, people will leave the property to their children. It is usually assumed and always hoped that children will live longer than their parents do, so this decision is a wise one to make. Furthermore, you are affording your children the opportunity to live in the home, so they will not have to spend their money on buying one of their own. Additionally, if you use the current property to rent out to people and to make money off of, then your children will one day have the opportunity to do the same.

When it comes to real estate, you can’t just do whatever you feel like. Legal restrictions will always come into play in one form or another. Therefore, you must absolutely consult with a professional. It would also be wise to speak with other property owners in the area to learn about their experiences and financial advice.

Ashlyn Sandoval writes about personal finance, economics and her experiences earning an online accounting degree.


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