I N V E S T O R
D A V I D
T I L N E Y
0 5 |
A C Q U I S T I O N
M E T H O D
Control and Profit Without Debt or Ownership with a
Master Lease FROM INFO PROVIDED BY DAVID TILNEY
If you’d like to invest in real estate,
There are many different reasons to
requires the master tenant to pay a
but you can’t afford to buy property
put a master lease into play and
percentage of the funds he receives
or just don’t want to take on a lot of
because you can be very creative in
from his sub-tenant only when he
debt – don’t despair! Think about
what you want to do. Traditional
receives those funds. A fixed lease,
renting your rental properties from
Landlords might acquire single
on the other hand, generally
owners who may be distressed
family homes and then sublease
requires the master tenant to make
home owners or housing providers
them to traditional tenants. A
payments even if he does not have
that need help in managing their
business that needs space for their
a sub-tenant. In the first scenario
properties or maybe just an owner
business might lease more space
the owner takes the risk of only
that wants needs to do something
than they need and sublease the
receiving rent when the master
with a property but they want it
extra space for extra income. And
tenant receives rent from his sub-
back later.
when Airbnb became the hot new
tenant and the owner also agrees to
way to invest in real estate, master
pick up most expenses associated
Think about a sandwich or Master
leasing became the way to acquire
with the property. In the second
Lease.
properties for short term rentals.
scenario the master tenant takes on more of the owner’s responsibilities
A Master Lease (ML) is a lease from
There are two types of master
and risks thereby entitling him to a
a landlord to a tenant, followed by
leases with as many hybrids as
greater profit (or loss) depending
a sublease by the tenant to another
there are owners with different
upon his success of maximizing net
sub-tenant or occupant.
needs. A performance master lease
income from the sub-tenant.
