6 Unit Aquisition Strategy - JV Oppurtunity

[Shem J.]

Hi BP, 

I needed some help thinking this thru. I was approached by a client for help in deciding what to do with a property she has. Its a Brick 6 unit all 3 bedroom units (in Auburn Gresham). 1 unit is currently rented for $1150 a month. The remaining 5 will rent for the same once occupied. Shes looking to sell but is also considering trying to rent the remaining units out and keep for cashflow. She has minimal experience in Managing property/Rehabbing/Tenant screening, which is where I come in. I'm trying to think of a win/win but not sure how to structure it. I didn't want to go the retail route by buying it outright since I'm already connected to her and shes considering partnering with me. But I'm considering offering to get the units rehabbed(Cosmetic $2-3k each) and rented. Im not sure how to structure it, do I ask her to allow me to take over her current mortgage payment ($2500) and workout a price shes happy with, while getting the units up to par and rented then pay her off once we've added value and increased cashflow? How do I protect my interest, in the event she likes the new income more than the future lump some payment? Should I just deal with the rehab while she continues to make the mortgage payment? My mind is all over the place and I need some ideas. Thanks BP

[Account Closed]

The best way is to do a Master Lease Option. This is where you lease the whole building from her for an agreed amount and you manage and rent up the other units hopefully for more than you are paying her. It's like getting a Lease Option on a house. Later when you get the income up you can exercise your option to buy it. If for any reason you can't get the income up enough then you can just walk away.