Master Lease Agreements

[Kylan Philbert-Richardson]

Hi All,

I am a newbie here in Massachusetts looking to get into my first deal. My plan is to start up and focus on a real estate agent business while accumulating knowledge and cash for my first deal. I may have access to gift funds, but have not yet explored those options as I do not want to jump the gun. I am speaking to a lender right now about FHA loan options with my father as a non-occupant cosigner. I am still on BP and have started to take free courses on real estate finance to try and give myself a boost.

In my due diligence, I have come upon properties that were purchased well below market value in the mid-90s. I have found some information as to who I might contact about purchasing the property, and my intentions are to offer the chance to do owner financing so that we can leave the banks out of it. With the option to refinance with FHA, or traditional financing based on the rental income after renovations have been done - exit options.

My question is how does one approach such a person? I plan on making this approach integral to my business and would be delighted to hear from those who have had some success here.

Best,
Kylan 

[Nathan Gesner]

@Kylan Philbert-Richardson the first thing you have to do is educate yourself on language. If you can't explain it to the seller properly, you won't seal the deal.

Master Lease is where you rent the property and then sub-lease it to other renters. Example: I rent a house for $1,000 a month and then sub-lease it to another person for $1,400 a month. Owner gets their $1,000 and I pocket the extra $400.

Seller financing is what you're looking for. You have a mortgage and promissory note with the Seller, agreeing to make payments each month just like a typical bank mortgage but without as much paperwork. It typically includes the agreed amount of interest, payment start date, payment frequency, early payoff options, and a "balloon payment" wherein you pay the remaining balance off so the Seller can walk away.

Use the search bar above or Google and look for "seller financing" or "owner financing" and you'll find plenty of information.