Hi guys, please help me understand the difference between master leasing and property management. To me there’s not much difference. In both cases the responsibilities seem to be the same. If i’m missing something let me know.
In a master lease arrangement, you are guaranteeing the rent every month. You sublet the property to tenants who hopefully pay you more than you are paying the owner.
If you are a property manager, your fee is a percentage of the collected rents. In most states, managing property for a fee requires a real estate broker’s license or that you work under a licensed broker.
In both cases, you are the middleman between a tenant and the owner. As a master renter, you have to pay the rent even when a unit is vacant; whereas, the property manager does not have this risk.
Dave T’s answer is a good one. Master leasing is one way around a real estate license requirement. But if your going to do that, don’t just master lease. Do a lease-option and when you get the place in shape you will reap the profits, not the owner who will likely want to take over or sell when you got the place humming and the master lease is up.
Basically that’s what a master lease is. The technical term is Master Lease Option or MLO.
Thank you very much guys. That was very helpful. makes a lot of sense
Time to correct you, a master lease is not basically a lease option. A master lease strictly refers to a lease that over-rides all the other leases. It is just renting the whole property, or part of it. You can master lease a portion of a building or complex, or the whole thing.
The option part is a completely separate issue, and is not included in the terminology master lease by definition. It is the terminology that has been in use since i was in kindergarten during WW2 and my dad was a builder-investor. I’ve been an investor since 1955 and a broker since 1965 and no one has tried to change the definition.
That is like saying a renter with a lease is basically a lease-option, it just ain’t so. And your poor usage won’t make it so.
Hi there , I think Brian is quite right to define the term more accurately and i have the same knowledge , Thanks for sharing .
You’re right and with Master List, if you lease an apartment, you can sub-lease it to another person.