November 14, 2008
Once upon a time I was a burned out landlord. I didn’t mind managing properties, and done it successfully for three decades when I realized that I was pinned down to the area where my properties were and was unable to take advantage of the money I’d made in real estate. I had been teaching the only single family management seminar in America for many years, and was wearying of the whole subject of management. About this time David Tilney came along and adapted my management techniques to his own particular style with such great success that I immediately surrendered the management seminer field to him and retreated to the side lines.
This solved part of my problem, but still left me with well over 100 properties to manage.
At this point, I mined my prior student list and found several people who had become successful managers in their own right with their own and others’ rentals. With each of them I made the following proposition:
I would lease my houses to them for 90% of the rents they actually collected each month; less out of pocket expenses for documented maintenance and repairs. This way I retained all risk of vacancies and administrative expenses and they picked up a 10% yield on my rents without any risk or investment.
This worked like a charm. It augmented their income to the tune of several thousand dollars a year and it set me free to enjoy many more times as much personal freedom to travel and write than I had ever had before.
What’s more, since the master lessee, not the owner, leases the house to its renter/occupant, any liability incurred between the tenant and the master lessee won’t accrue to the owner. If the manager/Lessee were a corporation whose only asset was the Master Lease, most law suits would stop right there. Eliminating all that liability is a major advantage.
Next time I’ll show you how this can become an even better thing for entrepreneurs who want to build cash flow without risking any money or unpaid time.
(Maybe you need to go find a burned out landlord so you can master lease his/her properties)