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Commercial Real Estate MLO
Finally, The Truth About Master Lease
Master Lease Option is one of those niches that sounds really good in theory just make sure it’s not your only focal point. For starters this niche is NOT the easiest and it has been around for years…
IMPORTANT: 99% of all Master Lease Options (MLO) fail.
Before I reveal these secrets let me explain exactly what MLO is in a “1-2-3 nutshell” instead of 1, 2, or 3 days of your time!
- MLO is where the Seller of a Commercial property agrees to lease “You” the entire property as their one tenant. This means you become their one tenant hence the name Master Lease. You guarantee the current gross rents (what’s coming in – as income). You benefit by pocketing all the new income from bringing in new management, raising the rents and filling the vacancies.
NOTE: You control the entire property as the Master tenant by putting down a deposit. You then have an “Option Agreement” to purchase the property at a later date for an agreed purchase price… that’s the “Option” in name Master Lease Option.
THIS IS THE NICHE: You never actually close on the property since you have a lease in place – until – you exercise the option to purchase, so you can always walk away if you do not achieve the income potential of the property. The only thing at risk is the deposit – but – you get that back from filing the empty units… remember you must be dealing with a motivated seller.
What Are The Best Type of Properties For Master Lease Option?
You have the best shot for a Master Lease Option if you know what I’m about to reveal for the first time here. It works best for Apartments and Self Storage facilities although it can also work for others. My students are using my techniques for MLO primarily with Self Storage the ultimate property type and the best fit. Remember; never try to pound a square peg into a round hole. You need multiple exit strategies when it comes to commercial investing and for that reason alone, niches are tough if you don’t have an alternative approach.
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