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There are a lot of ways to structure a master lease. Many start with a “performance” master lease because you only need to pay the owner when (and if) your tenant pays rent. If the house is vacant, you don’t owe any rent. If the tenant does not pay, you don’t owe any rent.
A “fixed” master lease would require that you pay the owner a fixed amount every month even if the house is vacant. You’ll get more cash flow with these but you are also taking on more risks if there is a vacancy.
Many owners prefer the performance lease because they will make a little more cash flow even though they are taking on the risks of a vacancy.
Of course, the best way to protect yourself from a tenant who does not pay is to pick the best tenant to begin with.
The owner who will allow you to master lease is not necessarily a seller. It may be a landlord who wants someone else to “manage” their properties. It could be an accidental landlord — a person who could not sell so they want to rent out their house for enough to hopefully cover most of their mortgage.
Anyone with a vacant house is very likely to agree to a master lease. Look through the fsbo sites for vacant looking houses in your area. Even though their house is for sale, they may agree to a master lease. A frustrated landlord (eviction) is another opportunity. Many of the people who are doing master leases get referrals from real estate agents.
We have a lot of training in the premium member area about finding these deals and finding good tenants.
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