[Dee L Graber]

Dee L Graber

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Here’s the background. While property management companies are a dime a dozen around the country (and worth probably close to those numbers), those students who have come through David Tilney’s master leasing training for residential properties are few and far between. Suppose you are explaining the master leasing concepts to a homeowner from whom you’d like to master lease, and s/he asks what happens if in the sudden event that you are not able to continue doing the work for your part of the bargain — whether because of illness, accident, death or whatever.

If this house is in an area far from anyone else who is competent using Tilney’s training, what kind of Plan B can you propose to that homeowner — to pick up where you might unexpectedly become unavailable. Even if you left that homeowner a name or two of people on Tilney’s email list so they could ask in an emergency if there was anyone in that region willing and able to pick up the reins, that’s not much of a plan — because of the high likelihood there might not be anyone else in that area, which you may well have known anyway going into this.

In such a case, all of a sudden your systems, repairmen list, bill processing, and your expertise that both the homeowner AND the tenant have been relying on are out of reach. So what kind of a Plan B could you propose to that homeowner, so that if you are suddenly (either temporarily or permanently) taken out of the picture, s/he won’t be left with a contractual mess and obligations that can’t be met?

–Dee

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[Jackie Lange]

Jackie Lange

Dee,

This is a great topic. It’s not just master leases that you need to be concerned with. If you own rental properties, you need a Plan B. If you got sick or hurt while you are in the middle of a rehab project, you need a Plan B. Or if you suddenly die, you need a Plan B.

Your Plan B could be a spouse or your adult children. But if they have shown no interest in your real estate business you’ll need to reach out to the investor community and trusted friends.

Instead of looking at fellow investors in your community as competition, you should look at them as allies. They can be your Plan B and you can be there Plan B. You should train each other and share information on your business systems, contractor lists, etc. Then if anything happens to you, your business will not skip a beat.

About 15 years ago, I found a great deal. The house was worth $140,000 and I got it for $25,000. But it was about 1 1/2 hours from my house. So I teamed up with an investor who lived close to the property. His job was to oversea the rehab, get materials, etc to get the house ready to sell. When the house sold, we agreed to split the proceeds after all expenses.

But about 2 weeks in to the project, his 37 year old wife got really sick. She was in the hospital for a week then she passed away. Needless to say, he could not finish the project and I had to take over getting the house rehabbed.

I still split profits with him when the house sold. He sent me a lot of deals in north Dallas and I sent him a lot of deals in South Dallas.

If you were in an automobile accident and suddenly died, who would take care of your real estate business? You need to have someone trained to step right in. Then, when you’re talking to that owner about a potential Master Lease, you’ll have an answer for the “what if” question.

Anyone else have some thoughts on this one? Share them here..