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Leasehold

Categories: Real Estate

This situation somewhat splits the difference between owning a property and renting. It applies in instances where the tenant plans to stay for a long time.

Much like a purchase, leasehold agreements often require a downpayment...something like 20% of the value of the lease. The tenant then pays monthly rent, just as they would under a typical lease.

Meanwhile, under a leasehold deal, the tenant can make whatever improvements they want. The main downside: at the end of the lease, those improvements (any buildings, etc.) revert to the property holder.

Find other enlightening terms in Shmoop Finance Genius Bar(f)