Posts Tagged ‘vacancies’
Master Lease Option – Creative Commercial Property Management for Difficult Times
I want to introduce you to a creative lease option technique that is specifically suited to today’s difficult commercial real estate market.
As with any lease option, a master lease option is a good way to gain control of a commercial property without making a large down payment or qualifying for financing (which is near impossible in today’s commercial market).
Your goal here is a win-win for both you and the current owner but with a significant upside for you in both the near-term and long-term. As has been proven time and time again, there are always ways to make serious money in real estate, regardless of the current market conditions. The time is ripe for the Master Lease Option in today’s difficult commercial market.
Your goal is to find a quality commercial property with a high vacancy rate but with good potential of turning it around. An ideal candidate is a multifamily complex with a 50% vacancy rate and NOI that is barely breaking even with the property’s expenses. Of course, the specifics of every deal are different but this example works well in many commercial markets today.
What you do is negotiate a lease option where both the lease and sales prices are based on the current underperforming vacancy rate and NOI. This assures the current owner that s/he will be able to continue making the mortgage payments during very uncertain times. That’s a win for them.