Updated about 6 hours ago on . Most recent reply
Master Lease (Entry Level)
Investment Info:
Single-family residence other investment.
Cash invested: $5,000
This is a master lease situation, where we have a lease with the current owner, then lease it out to tenants. Planning on getting financing to buy the owner out in 2-3 years.
What made you interested in investing in this type of deal?
Getting our foot in the door of something that will cash flow.
How did you find this deal and how did you negotiate it?
One of my business partners owned it, so we structured a lease that helped him get some financial backing to maintain it.
How did you finance this deal?
The owner went traditional, and I personally added capital to our business at a 5% rate.
How did you add value to the deal?
Updated electrical, currently in the process of installing a mini split, which addressed the current tenants' concerns of no heat/air and their breaker flipping when they used certain appliances. This will likely keep them in the house for a while longer.
What was the outcome?
Current tenant seems to be satisfied. Cash flow secured.
Lessons learned? Challenges?
Scheduling. We had paid for the electrical work 2 weeks before it got done. However, the permit took a while to get approved (I attribute it to Mardi Gras in Mobile, AL). Then it was a matter of coordinating the power shut-off and the inspection for the same day the work was completed.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
No