Valued Add (Capital expenditure) with a Master Lease with Option

[Ade Brown]

Hi all!

I have found a really good property to STR. It is a multi unit development that has operated as Guest Homes for over 30 years. The property is owned free and clear by the current owners and they just want to get out of the business.

I am looking to do a Master Lease with an option to purchase. Issue is that the property needs some serious updating. I want to upgrade the rooms and build a pool. 

Here's my issue, what happens if I do not have the money to purchase the property after the lease expires and the seller does not want to renegotiate? Do I lose the value of the renovations and I just have to walk away?