I found an owner with a six plex, 3 plex 6 unit condo and a sfh. He ownes all free and clear. He is motivated and will consider a master lease for all. He wants security knowing i will not run off with the rents if we work a deal. I have no cash but equity in another property. He will carry for as long as 10 to 15 years. Im looking for ideas to make sence out of these deals with a no $ down under a lease scenario. Can it be done with multiple properties?
His properties are all cash flowing and his asking prices are within reason.
Exit plan is to control and hold for income and in the future sell them.
I wish I had an answer but I don’t. I say read, read, read. Figure something out. You’ll regret not doing it. Check into www.naked-investor.com I hope that’s right. I think someone here we’ll help. Seem’s like a golden opportunity. Just keep in mind there is a reason it is a golden opportunity. Either he hasn’t tried to sell. LEt’s hope. Or nobody wants it. Good luck. I hope you make a ton.
I’m assuming you will do a lease with option to purchase on all the units then basically sandwich lease the units out and pay your lease fee from the rents. At some point you will sell the options or exercise the options and resell the individual properties.
You may need a option fee and if you have no money you can create a mortgage on your property to give the owner.
Just a guess here but I think you should have seperate purchase contracts. Reason being I believe 4 units and under are residential and above 4 are commercial properties. Herbster
Just a slight correction. All the properties mentioned are residential dwellings. All would be depreciated as residential rental property on a 27.5 year depreciation schedule.
It is the number of units that dictates the financing. Each of the properties mentioned can be financed with a commercial loan, however, only residential properties consisting of four or fewer dwelling units can be financed with a FHA, VA, or conventional residential mortgage loan.
Nice stuff im learning here. Again im wanting to figure out the whole multiple/ master lease deal. My goal is to give him his security he wants to make it happen. The LLC part makes sence and him releasing more as i perform is making sence. Is it like a performance note?
donrock i would like to learn more about your thoughts so i will make contact. All are interesting thoughts and i will need to learn more and make an offer as all he can do is say no. But i of course want to have a grip on what im talking about when i do present it.
A master lease is simply a rental arrangement. If you agree to become the master renter for all these properties, then you are guaranteeing the rental income each month. As the master renter, you also have the right to sublet each property. You charge as higher rent than you are paying, so you get cash flow from the rent spread. You also have the risk of vacancy. A vacancy means no income for you, but you still have to pay rent to the owner.
If you couple your rental agreement with an option to purchase agreement, then you have a “master” lease option. As you exercise your option to purchase individual properties from the package, the owner’s rent goes down, but is replaced by the interest income he collects on his financing arrangement with you.