Has anyone know about or done the MOL (Master Lease Option)

Question

I came across this strategy today and I couldnt believe it until finding out that it was true but besides that. Has anyone used this strategy? and tell me how it worked for them. I'm looking about doing this strategy to get into my first commercial property or will be first.

Bill Ham · Answer

I have done many including a 108 unit B class apartment complex. I also teach the subject. What has been posted in this thread is correct though. I would not try and make an offer for a MLO and expect to put nothing down.

Your offer needs to create value for the seller. They are not that hard to do if you follow the right formula but again dont think this is a way to do "free" real estate.

Don Konipol · Answer

Master lease option on commercial properties - with no capital upfront - is usually only available on properties with severe negative cash flow AND the owner believes that the lessee brings significant talent and experience to the table to cure the problems.

This is another of the real estate "creative" techniques that look great in theory but takes a lot of knowledge, experience, effort and luck to pull off.

About 30 years ago I did one on a office/warehouse worth about $300,000.  I was able to bring in two tenants (the property was empty when I negotiated the deal) and put up a $15,000 deposit, $5000 of which was collected as deposits from the tenants, so I was in for $10,000.  I had an option to purchase property for $300,000.  I  held lease for 4 years, earning a positive cash flow of $1150 per month, and then exercised my option and sold  in a simultaneous transaction netting $87,500 on the sale.

The transaction took me 6 months to put together, I was a commercial real estate broker at the time and the property was one of my listings.  Negotiations were long and drawn out, made ever more complicated by liens against the property, IRS problems of the property owner, ex wives of his with varying interests from divorce settlements, an adoption he and his current wife were attempting to pull off, and a "lost" $22000 cashiers check from a previous buyer (the check actually was lost, after taking control of the property I found it stapled to the back of a child support order!).

Account Closed · Answer

Marshawn,

Lets say you swing the deal with no money. Do you have a reserve in case something go wrong? Do you have money for insurance, closing cost.

Joe Gore

Marshawn Moore · Answer

@joe Gore

B class 50unit

Account Closed · Answer

Marshawn,
	 
	 What type of commercial property are you looking to get into?

Joe Gore

Marshawn Moore · Answer

@Joe Gore i heard that its none of your money involved

Account Closed · Answer

It might work if you bring money to the table.

Joe Gore