Master Lease Agreements + Option (Apartments)

[David Bardwell]

Who's using this strategy effectively to build their portfolio? I'm planning to target mom and pop owners with 4-20 units in B- and C areas. Do you have any tips for someone looking to land their first MLA deal, good books, resources?

[Don Konipol]

@David Bardwell The reason you find so little response for master lease commercial property deals is that doing one is extremely rare. Essentially, the lessor is allowing a third party operational, financial and strategic control of his property with a VERY small financial comittment. Typically the lessee has no more operational expertise than the lessor. Most of these deals end up with at least one and usually both parties unsatisfied. For the lessee, without a deed your protection is contract law, which with the protections placed in the contract by the lessors attorney, and the same by the lessees attorney, almost guarantee a lawsuit and counter claim. Recently, a friend of mine entered into a master lease (as lessee) for a medical property. After 3 months of leasing activity the property owner unilaterally cancelled the lease. What followed was a year of legal maneuvering, claims, counter claims, depositions, etc. Case finally settled with my friend collecting a rather modest settlement. These deals can be profitable, but for various reasons are difficult to complete and difficult to profit. I personally prefer a legal position involving deeded ownership or secured lien position; however almost any real estate activity can be profitable given the right set of circumstances.