All Forum Posts by: Don Ireland

I'm looking at a deal consisting of two buildings (a 4plex and Triplex) and 6 of the 7 units are already rented on 1 year leases.

I'm interested in doing a master lease agreement.  Is it possible to do this when the place is (mostly) occupied?

Can I somehow take the current landlord's position in these existing leases by way of this Master Lease?

Sorry for the delayed response.  I meant to send a reply the night your message came in but when I got home, I forgot all about it.

Anyway thanks for the info.  It looks like an interesting option.

Anyone?

In one of the most recent blog articles (I just received an email yesterday pointing me to it), the author (@Dave Van Horn) discussed using a HELOC as a sweep account.

It's method #3 in the following link.

https://www.biggerpockets.com/renewsblog/eliminate...

This sounds to me like using a HELOC to make payments on the primary mortgage. But a HELOC would typically have a higher interest rate than that of thr primary mortgage.

So how would this be a benefit?  What am I missing?

TIA!

If a property has tenants in place on existing leases, how can a Master lease be used to take control of the property?  

Normally, you'd sign a Master Lease with the owner and then sub-lease to a tenant.

But it seems like the Master Lease couldn't replace the existing lease.

I realize this is an old thread but I've recently been researching a very similar issue.  The responses given here directly conflict with those given at the following link.

https://www.avvo.com/legal-answers/how-can-a-prope...

Following is the most pertinent reply from that link (given by a KCMO RE Attorney):

Because generally, if acting as an agent for the owner while managing the property, the property management company is exempt from the requirements.

After further discussion it seemed the the crux of it is to not have the Mgmt Co take a fee.

I would think so.  Until they're BOTH completely out, they still have possession of the unit.  I'm guessing your lease is like that of most -- Joint and Several Liability and all that right?  If so, you can legally charge either one OR BOTH of them.

The only thing I see to question:  who initiated the ACH?  Was it on your end or their end?  If it was on your end, you MIGHT have an issue.  If it was on his end, then HE was supposed to tell the ACH processor.  i.e. if it was done via Cozy, that's tenant initiated.  If the LL submitted the tenant's account info to the processor, then it's LL initiated.

If you do buy it and allow him to stay (via lease or other means), make sure he signs something that says in BIG BOLD LETTERS something to the effect of "I UNDERATAND IAM SELLING MY HOUSE TO JOHN SMITH AND THAT IF I DO NOT MEET THE TERMS OF MY LEASE, I MAY BE EVICTED.  I ALSO UNDERSTAND THAT AT THE END OF MY LEASE, JOHN SMITH MAY OR MAY NOT ALLOW ME TO RENEW MY LEASE.  IF THE LEASE IS NOT RENEWED, I WILL HAVE TO MOVE OUT."

I've heard too many horror stories in which the investor bought the house, allowed the seller to continue living there (on a lease) and then the seller (now tenant) sued the investor claiming they didnt know they were "actually selling the house".

I have to agree.  It definitely sounds like a good deal and dont fault you one bit for it.  But the equity that you used was very similar to a SAVINGS ACCOUNT.

Money was paid in my paying down the mortgage and accumulated.  Then you took 50k OUT OF this "savings account" to be used as the DP.

Again, doesn't sound to me like a bad deal by any means.  But it's a far cry from "no money down" or even "no money out of pocket".  That makes the title misleading.

P.S. if one were to look at your REI business a whole, you did not add any more money "out of pocket" to make this deal happen. But your BUSINESS did put in 50k ad DP on this deal.

If the IRA has the funds to lend to your LLC, why not set up an LLC with the IRA being the single member and you as thr MANAGER of said LLC? Thr profits from the rental go back to the IRA rather than directly to you of course.