I recently got a call back from one of the letters I sent out to an out-of-state owner, who was not ready to sell their 3b/2.5b townhouse yet, but was interested in ” … guaranteed monthly rent, no vacancy, & take care of most of the expenses.”
Her tenant is vacating on Oct. 1st and the current rent is $2800.
The property is free and clear with the following expenses:
Insurance – ?
Property Tax -585
HOA – 656
Chimney cleaning every 5 years – ?
Dryer vent cleaning -?
Utilities are billed to the tenant
My questions are:
1. Is there a rule of thumb with regards to what % the owner receives on a fixed master lease?
2. How are the maintenance, expenses and improvements (updating kitchen/bathroom) paid for? Are they taken from the rents collected or would the owner need to be responsible for that?
3. How many years should a fixed master lease go for, at minimum?
4. Where I can find the funding, to pay the fixed rent I would owe to the owner?
If you’re new to master leasing, you should definitely NOT do a fixed master lease… especially not with rent that high!
Funding to pay the owner rent should come exclusively from the tenant. That’s why a performance lease is much better. With a performance lease, If you collect rent, you pay the owner. If the house is vacant, you don’t make anything but you also don’t owe anything.
I suggest that you study the entire section on Master Leasing before you sign a master lease!! Just because someone will sign a master lease agreement, it does not mean you want the deal.
The training will answer all your questions and much more