All Forum Posts by: Tanh Truong

A master lease is a single lease in a property that gives the lessee the ability to sub lease the property. It's another tool that allows an individual to creatively gain control of a property. The lessee doesn't own the property, but they're able to control who they lease the area to. Leases are structured differently; sometimes the lessee is responsible for maintenance, taxes, etc. and sometimes they're not so it depends on the negotiations between the lessor and lessee. 

For example, you could use a master lease in a 8-unit apartment complex. The owner could be tired of leasing out the property to individual tenants and would rather only deal with one, so you as the investor negotiate a master lease with the owner. Let's say the lease is at $4,000 and you're able to sublease the property for $8,000. For simplicity's sake, let's omit all the expenses and say you'd net $4,000 in that deal. The owner gets what he/she wants and you, the investor, get a great deal. 

Welcome @Logan Stralka! Could only wish I started at your age! This is a great community with lots of knowledge that's shared. I'd challenge you to absorb as much as you can. Books and podcast were instrumental in helping me gain a strong foundation. The ABCs of Real Estate Investing by Ken McElroy is a good starter book. Happy investing!

I think @Scott Trench hit the nail on the head here. I would add that a background and credit check is necessary for your local mom-and-pop tenants and startups. I might even go as far as asking for PFS and balance sheets. Most often with national/credit tenants less is more as they are less prone to fail. Lastly, it would be beneficial to find out their track record with previous locations and maybe researching through talking with prior neighboring tenants could prove fruitful. 

Although I'm no expert in the brokerage space, I would say networking is instrumental. You would have to continuously network with buyers and sellers (mainly investors on both sides). As far as for branding and scaling, I believe transparency and integrity is fundamental for people to trust you. As they say, people do business with people they like and trust. 

Congrats on the new management role! As I'm not local to the area, I can't help with any recommendations there, but I will say having an extensive interview process certainly helps. As for CPA, I can recommend my CPA who's local to me and has a good knowledge base on the tax laws (I'm not 100% confident about his knowledge on CA law). Aside from that, I would recommend networking with local investors in finding who they use for PM and CPA. 

The short answer is that it depends haha. I can't give you a detailed answer because I can't confidently say what's best for your position since I don't have all the details. I would, however, challenge you to look at the option that gives you the best ROI or suits your long term goals best. If you purchase the commercial property at a favorable price, cap rate, and favorable loan terms I would argue that might be a good option, but if those factors aren't there and the BRRR's provide higher ROI's then I would sway towards that option. Whichever option you decide, you should revisit your goals and align with that.

I would take a multi-faceted approach. First, I would look at the demographics and the vacancies in the area to determine whether or not you're able to acquire a new tenant. Second, it would be a good idea to get the tenants on a lease, whether month to month or a  longer term lease at the new rate or close to the new market rate depending on the typical vacancy for your area. Hope this helps!

Atomic Habits

Traction

The Go Giver

For the longest time, I've seen 30%(GP)/70%(LP) split, with 8% pref. But now, I've seen other variations like 60/40 with differences in the preferred returns. I would try to be different! 

It's all about the fabled OPM (other people's money). When you find a good deal, the money will come.