Real Estate Investors Association of Greater Cincinnati

Author: David Tilney (1 articles found) - Clear Search

Master Leasing -The Safest Way to Get Started in Real Estate (and a great way to acquire property)



In 1978 a good friend of mine got me to joint venture with him on the purchase of my first single-family investment property in Colorado Springs. We continued to buy several other houses and a fourplex together. We hired 3 different management firms to run our small portfolio. Sadly, all three firms failed miserably, which forced me into the management business by default.

Initially, I just managed properties I owned or in which I had an ownership interest. Eventually, I expanded and took on others' properties to increase income and help cover overhead expenses.

As the business grew, I quickly became aware that the toughest part of property management was not dealing with tenants but dealing with the property owners who would eat up my time and increase my stress with questions and suggestions about their properties. It was difficult for them to understand that only one of us could manage their property.

In 1984 I stumbled onto a better way to do business.

I had a good friend with a problem house he had taken back through foreclosure. He wanted me to manage the property; however, I had very little interest in doing that. Over lunch in one day, I offered to lease his property from him for 35 years at a fixed monthly amount with the right to sub-lease the house to others.

This is an example of a master lease. I told him that if I wasn't making $1,000 per month spread on the rents by the end of the lease, then I had made