master lease option questions

[Brendan Canning]

Hi Folks - New BP member here and have been doing a lot of reading on master lease options. Seems like a very intriguing way of managing property and benefitting from increase NOI and ultimately property value.

I am looking at a 3 family property that needs a ton of work (perhaps $75-100K, although I haven't done a deep dive on pricing yet). The property is fully rented, albeit at lower than market values.  I don't have the funds to put a 20% down payment on the property AND invest in the making the property.   Sale price is acceptable, but would want to get it lower. Owner has owned the property forever and I believe is free and clear. She wants out.

A few questions for MLO experts:

1. Does an MLO make sense in this case? Are MLOs only used for commercial? As a 3 family, would this be considered residential?  Would seller financing be a better strategy here?

2. Does an MLO only work for distressed properties? This one is, but thinking about how I would employ strategy with other properties.

3. When I exercise option to sell, does bank take into consideration equity in the property (option price/market value), or would I still need to put down 20% in cash?

I think that is all for now. I may have additional questions. Thank you for taking the time to read and/or respond.

Brendan

[Brian Gibbons]

Best trainer in MLO is @Bill Walston

Look him up!

@Brendan Canning