BiggerPockets

My opinion, there are 3 ways to get cash.

The basic level is wholesaling. You have low risk, somewhat small profit.

The second level is rehabbing. You have more risk than wholesaling, but more profit especially when you sale to a retail buyer instead of to another investor.

The third level is holding property. There's the most risk involved, but the largest payout.

That being said, my strategy has been to wholesale as many apartment complexes as I can to build up my capital reserves. Once I've built up about $250k, I will look to acquire and hold apartments.

I will also be looking for partners in these deals, both debt and equity partners.

Another way to get into commercial would be to Master Lease into a commercial property. This option allows you to control everything, own nothing, and receive the profits from increasing the NOI. Of course, you would also include the option to purchase the commercial property at a specified later date.

Hope that helps.

Originally posted by Andre Green

Daniel how would you Master Lease a property without owning?

That's the nature of the Master Lease Option, you are the Master Lessee.

For example, lets say we are looking to Control an apartment complex that has 50 units. The current owner is not managing it well, vacancy is 50%. We would approach the owner and come to an agreement for a Master Lease Option. Basically, we would manage and control the 50 unit property, the owner would still retain all title and ownership of the property. What's the benefits?

For the owner, he no longer needs to deal with 50 (potential) tenants. He gets out of the day to day operations and management of the company. Now he only needs to deal with 1 tenant, the Master Tenant (that would be you). He still owns the property, no title has changed hands.

For you, you have now gained 100% management and operational control of the property. You are responsible now for paying the monthly note on the property, pay off all the expenses, increasing the occupancy and so on. The advantage is that, if you are able to increase occupancy to say 80% from the current 50%, the difference in rental income would go into your pocket, after paying the owner your monthly lease payment for the apartment (based on 50% occupancy).

So, the owner gets to collect a check from 1 tenant and not have to deal with the day to day operations and headache. You get to come in for no money down and try to increase occupancy, lower expenses, etc. in order to pocket the difference. You also have the Option to purchase the property from the Owner at a before agreed upon Purchase Price and Purchase Date. Also should you not fulfill your duties, that is you mismanage it, lose money on it, basically run it to the ground, the owner can simply terminate the Lease Agreement with you and take back control of the property. In other words, there is no prolonged and expensive foreclosure legal process to kick you out...it's just a quick termination of the Master Lease.

Again, you do not OWN the property in a Master Lease until you exercise your OPTION to buy the Property.