Where do you get master lease agreements?

Question

And what is the smallest amount of money can be put down using a master lease agreement to buy commercial real estate like an apartment building?

Tony Marcelle · Answer

Thanks.

Denise Evans · Answer

@Tony Marcelle, there is too much to tell you to put in the contract. It would be tens of thousands of words. Either you have an attorney who knows how to write them or you don't.  I'm sorry.  Interview attorneys and ask them what they would include in such a contract that is different from a normal lease.  You'll get a sense of which ones know what they are talking about.

Also, ask the BP community to share stories about what can go wrong with such an arrangement. All the horror stories will provide you with guidance about lease clauses to protect yourself.

Tony Marcelle · Answer

What would I need my attorney to write in the contract that protect me in case something like that happens? Is it true master lease agreements can be used to sublease any other commercial real estate besides apartment buildings?

Denise Evans · Answer

@Tony Marcelle, they don't care about the property until you show them what it can become.  I can't tell you how many properties I've managed for friends and relatives and even THEY think it's easy and they don't need me after I've leased them up. Everybody thinks everything is easy when you do it, even though they never did. They think they just gave up too early.  ASSUME they will try to get the property back and cut you out. Write your contract accordingly.

Tony Marcelle · Answer

From what I heard, doing rehab was supposed to be a good thing for the person taking over the property along with decreasing vacancies. What are the odds  the owner of property wanting the property back after they are the ones who gave up on the property in the first place? This master lease sounds totally different from different people who have done it and said it is great way to purchase commercial real estate with a lot of positives to go along with it.

Denise Evans · Answer

@Tony Marcelle, a master lease agreement is just a lease that freely allows you to sublease the property. There is no smallest amount down.  Often, older owners or owners fed up with a current management property just want the headaches to go away.  You can get in for nothing.

Your risk is that you will make repairs or improvements to the property and the owner will then terminate your lease. Your other risk is that you get everything stabilized and the owner falls back in love with the property. Make sure you have a lengthy lease period and an option to purchase the property within a defined time period (usually five years) for a defined dollar amount. Do not use a formula or "at its then appraised value," or similar methods, because they just lead to arguments and legal fees.