Mastering the Master Lease Option

Some of those that are interested in apartment investing might not be able to find the apartment financing they need due to lack of start-up capital, past credit problems and other issues that those investing apartment buildings can encounter. Through the Master Lease Option, it is possible to start small and gradually increase your interest through the use of “sandwich” lease transactions, where you lease an apartment and sublease it for a higher amount, pocketing the difference. You can eventually control the entire apartment building by undertaking this process on each unit as they become available, allowing you to make more profit monthly and set rental rates without any of your own money invested.

The great thing about using the Master Lease Option method for apartment investing is that you have nothing invested! You can pocket the monthly difference on the sub-lease of one apartment unit or multiply it by one hundred units-the choice is yours. The Master Lease Option is a way to enjoy the benefits of apartment real estate investing without the restrictive apartment financing options that can require more than 30% down payment, in some cases. For those that are interested in apartment investing, this is a great way to make monthly income, establish higher rental rates and test-drive an apartment building before you apply for a mortgage or commit to purchase a building.

Another great thing about the Master Lease Option method of apartment investing is that you don’t have to look for commercial properties that offer seller financing or a motivated seller because it can work on any multi-unit building. You can operate under a master lease agreement where you gain control of a number of apartments and enjoy the monthly income they generate through the rent difference. It’s as simple as that! In fact, there are some real estate investors that will sell their Master Lease Option agreements to other investors, which is known as wholesaling or syndication. You immediately get a percent of the sublease and you can move on to another Master Lease Option arrangement.

This might not be the best method to use on fixer-upper or rehab buildings and the high-priced luxury buildings aren’t the best to consider for this method of apartment investing, but you aren’t restricted by many other requirements. Instead, it is a great way to become involved in apartment real estate investing when you are short on start-up capital or think you might encounter problems obtaining apartment financing. Through the Master Lease Option method of building vested interest, you can enjoy monthly income and build a rental history on an apartment building, which can increase the appraisal and help you obtain apartment financing at a later time, should you decide to purchase the building.

No matter what stage of the real estate investing game you are in, it is easier to get into apartment investing through the Master Lease Option method and you can enjoy monthly income with little effort. Just find the apartment building you are interested in and utilize the proven techniques you can learn by using the Master Lease Option Method.

For many real estate investors, finding motivated seller leads might involve scanning the obituaries or the “for sale by owner” ads that mention divorces or “must sell”, but these aren’t always the ideal properties for real estate investing. In fact, most of the time, those that have little money to put down or have credit problems don’t know any other way to get into real estate investing, especially when it comes to buying commercial rental properties, like apartment buildings. With Master Lease Option techniques, you can get into the rental property business in a way that makes you monthly income immediately.

You can control income properties without the commitment of commercial mortgage financing until you have decided you want the property. The way that the Master Lease Option techniques essentially work is that you lease an apartment and then sub-lease it to another person at a higher rent, pocketing the extra cash. This is similar to a sub-leasing agreement, except it is covered under a master lease agreement with the owner of the property, which allows you to control the property without the commitment, until you decide that is what you want after the “test-drive”.

Many real estate investors that use the Master Lease Option techniques will tell you that they are no longer restricted to the properties that are offered by a motivated seller and they can enjoy real estate investing in the income-producing properties that they are interested in. When you have little start-up capital and you consider that many lenders want 20% or 30% equity in some investment property mortgages, like apartment buildings, you have to consider some of the options that the Master Lease Option techniques provide. As you make the difference in the monthly sub-leases, you are also raising the appraisal value of the income property or apartment building you are filling because the higher rental incomes raise the income method appraisal of the building.

It is a way to build equity using other people’s money, which is a recommended way to invest in real estate and it allows you to build a vested interest in the apartment building or multi-family income property as you build value, without the mortgage commitment. There are some real estate investors that use techniques of the Master Lease Option method to sell their interest in the sub-leases for a percentage of the remaining lease term and they are able to pocket the fees and move on to another property.

The great thing about using the Master Lease Option techniques is that they work on any kinds of properties, but most of those that have used the techniques in real estate investing will advise you to avoid the very expensive, high rent apartments or the rehab and fixer-upper apartments because they can be more difficult to control. The idea behind the techniques that are used in the Master Lease Option is that you have no money of your own invested, yet you are able to generate a nice monthly income without the commitment of a large mortgage payment or the need to scour motivated seller leads to find seller financing.