Master Lease Options - The Safest Way to Build Real Estate Cash Flow
We are so fortunate to have David Tilney speaking at our LAREIA meeting September 12! He is a sought after nation-wide speaker and teacher. GURUS come to HIS CLASSES!
Here's what David is going to talk about:
A Master Lease (ML) is a lease from a landlord to a tenant, followed by a sublease by the tenant to another sub-tenant or occupant. A master lease does not have to include an option to purchase the real estate.
• Achieve Financial Freedom Without Taking On Debt
- Net positive cash flow (after lifestyle cost) is what sets us free. Leasing
property with the right to sublease is a great way to generate that
cash flow and there is no ‘one size fits all.’
• Acquire Some Of The Benefits Of Real Estate Without Ownership (RE benefits as listed in Peter Fortunato’s “Paper Course”)
- Income (listed above)
- Tax benefits:
- Profit: Can sell or sub-lease ML interest (Keyper-Caravan & Joe West-Jack Miller)
- Management: Allows you to manage your sub-tenant (the owner manages you)
- Use: You have the right to use; however, if sub-leased this right is given away
- Amortization: Only available if coupled with an option on owner’s equity
- Security: Master tenants can borrow against well secured long-term leases
• ‘Test Drive’ Properties Before You Buy
• Consider Adding Master Leasing To Your Real Estate Investing Toolbox
- Little or no capital needed
- Less risk than ownership if property values drop
- Income is passive and can increase over time
- All rent paid by Master Tenant is deductible
- Works anywhere and with better houses than you could afford to
- Control property without ownership
• Is There Any Downside To Master Leasing? NONE - if you know how to manage!
- Know and comply with applicable laws
- Screen for the best tenants
- Share expectations
• Change Your Management Paradigm to Maximize Your Real Estate Results.
- Tenants are the assets, not the real estate.
- They are the solution to meeting your goals, not the problem.
- They are your on-site resident managers.
• Good Management is the Key to Master Leasing, as it is also to Long-term Real Estate Ownership
- Income is not based upon the time you spend managing.
- Income is not based upon your ability or willingness to work.
- Management proficiency allows you to acquire ‘burned-out’ landlords’
- The management skillset provides you an asset you can use to
negotiate equity positions with financial investors.
- Your skill set can help unintentional landlords solve problems.
Managing properties fits the ELF formula (easy, lucrative & fun). Have fun!
About the speaker:
David Tilney has owned and operated single-family houses for 38 years. He understands that real estate, if vacant, is not an asset but a liability. He also believes that his tenants are his greatest assets. David views his tenants as his on-site resident managers who are compensated with good long-term housing. Empowering tenants has allowed David and his wife, Mary, to spend 8 months each year in Naples FL and 4 months in Colorado Springs, without the need for any employees.
In 1984 David became a tenant and rented a house for 35 years, which he then sub-leased for a profit. By the end of 1996 David had leased and sub-leased over 100 houses. This business model has been so successful that one of his daughters and her husband support themselves and their family doing the same thing, as do many others who have studied and learned David’s systems.
John D. Rockefeller once said, “Own nothing, but control everything.” David has found master leasing to be a great way to control most of the benefits of real estate without all of the liabilities.