Master Lease / Sandwich Lease

[Rob White]

Whats to stop someone from master leasing (different from master lease option) properties from homeowners and subletting/leasing them to renters? In effect, becoming property managers without needing a real estate license and broker, which would allow them to not pay all the fees that come along with living in a state that require any Property Manager to have a RE license and broker to join the profession?

Seems someone could make a master lease stating the homeowner receives 92% of rent collected and keep the 8% without paying RE license and broker fees.

Also, they would earn more money as it would not be W-2 income, as most property managers earn currently.

Because the person creating the master lease would not have to pay RE/ Broker fees, they could give lower the fees to the homeowner or give better monetary incentives to the homeowner to master lease, as apposed to going with a licensed PM.

For example, if a property manager is at 10% fee with 100% of first months rent going to the PM, a master lessor could easily do 8% "fee" with no first months rent going to the PM company because they don't have RE/broker expenses or percentages they need to pay out.

Has anyone seen or experienced this? What are the pitfalls?

Thanks for reading!